Unassociated Document


    
      

    

    
       

       

       

       

       

      AGREEMENT
OF LIMITED PARTNERSHIP

      


      OF

      


      UNITED
DEVELOPMENT FUNDING IV OPERATING PARTNERSHIP, L.P.

      


      


      
      

      July
9, 2008

       

       

       

       

       

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      TABLE
OF CONTENTS

      


      
        	 
      	
                Page

              
	 
      	 
      
	
                ARTICLE
      I DEFINED TERMS

              	
                1

              
	 
      	 
      
	
                ARTICLE
      II PARTNERSHIP FORMATION AND IDENTIFICATION

              	
                9

              
	 
      	 
      
	
                2.1

              	 
      	
                Formation

              	
                9

              
	 
      	 
      	 
      	 
      
	
                2.2

              	 
      	
                Name,
      Office and Registered Agent

              	
                9

              
	 
      	 
      	 
      	 
      
	
                2.3

              	 
      	
                Partners

              	
                9

              
	 
      	 
      	 
      	 
      
	
                2.4

              	 
      	
                Term
      and Dissolution

              	
                9

              
	 
      	 
      	 
      	 
      
	
                2.5

              	 
      	
                Filing
      of Certificate and Perfection of Limited Partnership

              	
                10

              
	 
      	 
      	 
      	 
      
	
                2.6

              	 
      	
                Certificates
      Describing Partnership Units

              	
                10

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      III BUSINESS OF THE PARTNERSHIP

              	
                10

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      IV CAPITAL CONTRIBUTIONS AND ACCOUNTS

              	
                10

              
	 
      	 
      	 
      	 
      
	
                4.1

              	 
      	
                Capital
      Contributions

              	
                10

              
	 
      	 
      	 
      	 
      
	
                4.2

              	 
      	
                Additional
      Capital Contributions and Issuances of Additional Partnership
      Interests.

              	
                11

              
	 
      	 
      	 
      	 
      
	
                4.3

              	 
      	
                Additional
      Funding

              	
                12

              
	 
      	 
      	 
      	 
      
	
                4.4

              	 
      	
                Capital
      Accounts

              	
                13

              
	 
      	 
      	 
      	 
      
	
                4.5

              	 
      	
                Percentage
      Interests

              	
                13

              
	 
      	 
      	 
      	 
      
	
                4.6

              	 
      	
                No
      Interest on Contributions

              	
                13

              
	 
      	 
      	 
      	 
      
	
                4.7

              	 
      	
                Return
      of Capital Contributions

              	
                13

              
	 
      	 
      	 
      	 
      
	
                4.8

              	 
      	
                No
      Third-Party Beneficiary

              	
                13

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      V PROFIT AND LOSS; DISTRIBUTIONS

              	
                14

              
	 
      	 
      	 
      	 
      
	
                5.1

              	 
      	
                Allocation
      of Profit and Loss

              	
                14

              
	 
      	 
      	 
      	 
      
	
                5.2

              	 
      	
                Distributions
      of Cash

              	
                15

              
	 
      	 
      	 
      	 
      
	
                5.3

              	 
      	
                REIT
      Distribution Requirements

              	
                17

              
	 
      	 
      	 
      	 
      
	
                5.4

              	 
      	
                No
      Right to Distributions in Kind

              	
                17

              
	 
      	 
      	 
      	 
      
	
                5.5

              	 
      	
                Limitations
      on Return of Capital Contributions

              	
                17

              
	 
      	 
      	 
      	 
      
	
                5.6

              	 
      	
                Distributions
      Upon Liquidation

              	
                17

              
	 
      	 
      	 
      	 
      
	
                5.7

              	 
      	
                Substantial
      Economic Effect

              	
                17

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER

              	
                18

              
	 
      	 
      	 
      	 
      
	
                6.1

              	 
      	
                Management
      of the Partnership

              	
                18

              
	 
      	 
      	 
      	 
      
	
                6.2

              	 
      	
                Delegation
      of Authority

              	
                20

              
	 
      	 
      	 
      	 
      
	
                6.3

              	 
      	
                Indemnification
      and Exculpation of Indemnitees

              	
                20

              


      


      
        
           


        

        
          i

          
            

          

        

        
           


        

      

      


      
        	
                6.4

              	 
      	
                Liability of the General
      Partner

              	
                22

              
	 
      	 
      	 
      	 
      
	
                6.5

              	 
      	
                Reimbursement of General
      Partner

              	
                23

              
	 
      	 
      	 
      	 
      
	
                6.6

              	 
      	
                Outside Activities

              	
                24

              
	 
      	 
      	 
      	 
      
	
                6.7

              	 
      	
                Employment or Retention of
      Affiliates

              	
                24

              
	 
      	 
      	 
      	 
      
	
                6.8

              	 
      	
                Title to Partnership Assets

              	
                24

              
	 
      	 
      	 
      	 
      
	
                6.9

              	 
      	
                Miscellaneous

              	
                25

              
	 
      	 
      
	
                ARTICLE VII CHANGES IN GENERAL
      PARTNER

              	
                25

              
	 
      	 
      	 
      	 
      
	
                7.1

              	 
      	
                Transfer of the General Partner’s Partnership
      Interest

              	
                25

              
	 
      	 
      	 
      	 
      
	
                7.2

              	 
      	
                Admission of a Substitute or Additional General
      Partner

              	
                26

              
	 
      	 
      	 
      	 
      
	
                7.3

              	 
      	
                Effect of Bankruptcy, Withdrawal, Death or
      Dissolution of a General Partner.

              	 
      
	 
      	 
      	 
      	 
      
	
                7.4

              	 
      	
                Removal of a General
Partner

              	
                27

              
	 
      	 
      
	
                ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED
      PARTNERS

              	
                28

              
	 
      	 
      	 
      	 
      
	
                8.1

              	 
      	
                Management of the
    Partnership

              	
                28

              
	 
      	 
      	 
      	 
      
	
                8.2

              	 
      	
                Power of Attorney

              	
                28

              
	 
      	 
      	 
      	 
      
	
                8.3

              	 
      	
                Limitation on Liability of Limited
      Partners

              	
                29

              
	 
      	 
      	 
      	 
      
	
                8.4

              	 
      	
                Ownership by Limited Partner of Corporate General
      Partner or Affiliate

              	
                29

              
	 
      	 
      	 
      	 
      
	
                8.5

              	 
      	
                Exchange Right

              	
                29

              
	 
      	 
      	 
      	 
      
	
                8.6

              	 
      	
                Call Right

              	
                30

              
	 
      	 
      	 
      	 
      
	
                8.7

              	 
      	
                Duties and Conflicts

              	
                32

              
	 
      	 
      
	
                ARTICLE IX TRANSFERS OF LIMITED PARTNERSHIP
      INTERESTS

              	
                32

              
	 
      	 
      	 
      	 
      
	
                9.1

              	 
      	
                Purchase for Investment

              	
                32

              
	 
      	 
      	 
      	 
      
	
                9.2

              	 
      	
                Restrictions on Transfer of Limited Partnership
      Interests

              	
                32

              
	 
      	 
      	 
      	 
      
	
                9.3

              	 
      	
                Admission of Substitute Limited
      Partner

              	
                33

              
	 
      	 
      	 
      	 
      
	
                9.4

              	 
      	
                Rights of Assignees of Partnership
      Interests

              	
                34

              
	 
      	 
      	 
      	 
      
	
                9.5

              	 
      	
                Effect of Bankruptcy, Death, Incompetence or
      Termination of a Limited Partner.

              	 
      
	 
      	 
      	 
      	 
      
	
                9.6

              	 
      	
                Joint Ownership of
Interests

              	
                35

              
	 
      	 
      
	
                ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX
      MATTERS

              	
                35

              
	 
      	 
      	 
      	 
      
	
                10.1

              	 
      	
                Books and Records

              	
                35

              
	 
      	 
      	 
      	 
      
	
                10.2

              	 
      	
                Custody of Partnership Funds; Bank
      Accounts

              	
                35

              
	 
      	 
      	 
      	 
      
	
                10.3

              	 
      	
                Fiscal and Taxable Year

              	
                36

              
	 
      	 
      	 
      	 
      
	
                10.4

              	 
      	
                Annual Tax Information and
      Report

              	
                36

              
	 
      	 
      	 
      	 
      
	
                10.5

              	 
      	
                Tax Matters Partner; Tax Elections; Special Basis
      Adjustments

              	
                36

              
	 
      	 
      	 
      	 
      
	
                10.6

              	 
      	
                Reports to Limited Partners

              	
                36

              


      


      
        
           


        

        
          ii

          
            

          

        

        
           


        

      

      


      
        	
                ARTICLE XI AMENDMENT OF AGREEMENT;
      MEETINGS

              	
                37

              
	 
      	 
      
	
                11.1

              	 
      	
                Amendment

              	
                37

              
	 
      	 
      	 
      	 
      
	
                11.2

              	 
      	
                Meetings of Partners

              	
                37

              
	 
      	 
      
	
                ARTICLE XII MERGER, EXCHANGE OR
      CONVERSION

              	
                39

              
	 
      	 
      	 
      	 
      
	
                12.1

              	 
      	
                Merger, Exchange or Conversion of
      Partnership

              	
                39

              
	 
      	 
      	 
      	 
      
	
                12.2

              	 
      	
                Approval of Plan of Merger, Exchange or
      Conversion.

              	
                39

              
	 
      	 
      	 
      	 
      
	
                12.3

              	 
      	
                Rights of Dissenting Limited
      Partners

              	
                40

              
	 
      	 
      
	
                ARTICLE XIII GENERAL
    PROVISIONS

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.1

              	 
      	
                Notices

              	 
      
	 
      	 
      	 
      	 
      
	
                13.2

              	 
      	
                Survival of Rights

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.3

              	 
      	
                Additional Documents

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.4

              	 
      	
                Severability

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.5

              	 
      	
                Entire Agreement

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.6

              	 
      	
                Pronouns and Plurals

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.7

              	 
      	
                Headings

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.8

              	 
      	
                Counterparts

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.9

              	 
      	
                Governing  Law

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.10

              	 
      	
                Arbitration

              	
                42

              
	 
      	 
      	 
      	 
      
	
                13.11

              	 
      	
                Vote of Affiliated Limited
      Partners

              	
                43

              
	 
      	 
      	 
      	 
      
	
                13.12

              	 
      	
                Acknowledgement as to Exculpation and
      Indemnification

              	
                43

              


      


      
        
           


        

        
          iii

          
            

          

        

        
           


        

      


      AGREEMENT
OF LIMITED PARTNERSHIP

      


      OF

      


      UNITED
DEVELOPMENT FUNDING IV OPERATING PARTNERSHIP, L.P.

      


      This
Agreement of Limited Partnership (this “Agreement”) is entered into
effective as of the 9th day of July, 2008, by and among United Development
Funding IV, a Maryland real estate investment trust, UMTH Land Development,
L.P., a Delaware limited partnership (the “Original Limited Partner”),
and the Limited Partner(s) set forth or which may, in the future, be set forth
on Exhibit A
hereto, as amended from time to time.

      


      RECITALS

      


      WHEREAS, the parties desire to
enter into this Agreement in order to set forth the terms and conditions under
which United Development Funding IV Operating Partnership, L.P., a limited
partnership formed under the laws of the State of Delaware (the “Partnership”), will be
operated, as well as the rights, obligations, and limitations of the General
Partner and the Limited Partners with respect to each other and the Partnership
as a whole.

      


      NOW, THEREFORE, in
consideration of the foregoing, of the mutual covenants between the parties to
this Agreement, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties agree
as follows:

      


      AGREEMENT

      


      ARTICLE
I

      DEFINED
TERMS

      


      The
following defined terms used in this Agreement shall have the meanings specified
below:

      


      “Act” means the Delaware
Revised Uniform Limited Partnership Act, as it may be amended from time to
time.

      


      “Additional Funds” has the
meaning set forth in Section 4.3 hereof.

      


      “Additional Limited Partner”
means a Person admitted to the Partnership as a Limited Partner pursuant to
Section 4.2 hereof and who is shown as such on the books and records of the
Partnership.

      


      “Additional Securities” has the
meaning set forth in Section 4.2(b) hereof.

      


      “Administrative Expenses” means
(i) all administrative and operating costs and expenses incurred by the
Partnership, (ii) those administrative costs and expenses of the General
Partner, including any salaries or other payments to directors, officers or
employees of the General Partner, and any accounting and legal expenses of the
General Partner, which expenses, the Partners have agreed, are expenses of the
Partnership and not the General Partner, and (iii) to the extent not included in
clause (ii) above, REIT Expenses; provided, however, that Administrative
Expenses shall not include any administrative costs and expenses incurred by the
General Partner that are attributable to Properties or partnership interests in
a Subsidiary Partnership that are owned by the General Partner
directly.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      “Advisor” or “Advisors” means the Person or
Persons, if any, appointed, employed or contracted with by the General Partner
pursuant to its Declaration of Trust and responsible for directing or performing
the day-to-day business affairs of the General Partner, including any Person to
whom the Advisor subcontracts all or substantially all of such
functions.

      


      “Affiliate” or “Affiliated” means, with
respect to any Person, (i) any Person directly or indirectly owning, controlling
or holding, with the power to vote, 10% or more of the outstanding voting
securities of such other Person; (ii) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held, with the power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by or under common control with such other
Person; (iv) any executive officer, director, trustee or general partner of such
other Person; and (v) any legal entity for which such Person acts as an
executive officer, director, trustee or general partner.

      


      “Agreed Value” means (i) the
fair market value of a Partner’s non-cash Capital Contribution as of the date of
contribution as agreed to by such Partner and the General Partner as of the date
of contribution as set forth on Exhibit A hereto, as
it may be amended from time to time, or (ii) in the case of any contribution or
distribution of property other than cash not set forth on Exhibit A, the fair
market value of such property as determined by the General Partner at the time
such property is contributed or distributed, reduced by liabilities either
assumed by the Partnership or Partner upon such contribution or distribution or
to which such property is subject when the property is contributed or
distributed.

      


      “Agreement” means this
Agreement of Limited Partnership, as it may be amended or restated from time to
time.

      


      “Call Notice” means a Call
Notice, as defined in Section 8.6(a) hereof and substantially in the form of
Exhibit C
hereto.

      


      “Call Right” has the meaning
provided in Section 8.6(a) hereof.

      


      “Capital Account” has the
meaning provided in Section 4.4 hereof.

      


      “Capital Contribution” means
the total amount of cash, cash equivalents, and the Agreed Value of any Property
or other asset contributed or agreed to be contributed, as the context requires,
to the Partnership by each Partner pursuant to the terms of the
Agreement.  Any reference to the Capital Contribution of a Partner
shall include the Capital Contribution made by a predecessor holder of the
Partnership Interest of such Partner.

      


      “Cash Amount” means an amount
of cash equal to the Value of the REIT Shares Amount on the date of receipt by
the General Partner of an Exchange Notice.

      


      “Certificate” means the
Partnership’s Certificate of Limited Partnership, as originally filed with the
Delaware Secretary of State and as amended from time to time.

      


      “Code” means the Internal
Revenue Code of 1986, as amended, and as hereafter amended from time to
time.  Reference to any particular provision of the Code shall mean
that provision in the Code at the date hereof and any successor provision of the
Code.

      


      “Commission” means the U.S.
Securities and Exchange Commission.

      


      “Competent Independent Expert”
shall mean a Person with no material current or prior business or personal
relationship with the General Partner or the Partnership who is engaged to a
substantial extent in the business of rendering opinions regarding the value of
the assets of the type held by the Partnership and who is qualified to perform
such work.  Membership in a nationally recognized appraisal society
such as the American Institute of Real Estate Appraisers or the Society of Real
Estate Appraisers shall be conclusive evidence of such
qualification.


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      “Conversion Factor” means 1.0,
provided, that in the event that the General Partner (i) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a distribution
to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides
its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into
a smaller number of REIT Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall be
the number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time), and the denominator of which shall be the actual number of REIT
Shares (determined without the above assumption) issued and outstanding on such
date, and provided further, that in the event that an entity other than an
Affiliate of the General Partner shall become General Partner pursuant to any
merger, consolidation or combination of the General Partner with or into another
entity (the “Successor
Entity”), the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by the number of shares of the Successor Entity into which one
REIT Share is converted pursuant to such merger, consolidation or combination,
determined as of the date of such merger, consolidation or
combination.  Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event; provided, however, that if the General
Partner receives an Exchange Notice after the record date, but prior to the
effective date of such dividend, distribution, subdivision or combination, the
Conversion Factor shall be determined as if the General Partner had received the
Exchange Notice immediately prior to the record date for such dividend,
distribution, subdivision or combination.

      


      “Declaration of Trust” means
the Declaration of Trust filed with the Maryland State Department of Assessments
and Taxation, as amended or restated from time to time.

      


      “Dissenting Limited Partner”
has the meaning provided in Section 12.3(a) hereof.

      


      “Event of Bankruptcy” as to any
Person means (i) the filing of a petition for relief as to such Person as debtor
or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any
jurisdiction (except if such petition is contested by such Person and has been
dismissed within 90 days); (ii) the insolvency or bankruptcy of such Person as
finally determined by a court proceeding; (iii) the filing by such Person of a
petition or application to accomplish the same or for the appointment of a
receiver or a trustee for such Person or a substantial part of his assets; and
(iv) the commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided, that if such proceeding
is commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.

      


      “Exchange Amount” means either
the Cash Amount or the REIT Shares Amount, as selected by the General Partner in
its sole and absolute discretion pursuant to Section 8.5(b) hereof.

      


      “Exchange Notice” means a
Notice of Exercise of Exchange Right, substantially in the form of Exhibit B
hereto.

      


      “Exchange Right” has the
meaning provided in Section 8.5(a) hereof.

      


      “Exchanging Partner” has the
meaning provided in Section 8.5(a) hereof.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      “General Partner” means United
Development Funding IV, and any Person who becomes a substitute or additional
General Partner as provided herein, and any successors thereto.

      


      “General Partnership Interest”
means a Partnership Interest held by the General Partner that is a general
partnership interest.

      


      “GP Capital” means the
aggregate of Capital Contributions of cash made by the General Partner in
accordance with Sections 4.1 and 4.2 hereof.

      


      “GP Minimum Return” means such
amount as may be necessary or required to allow the General Partner to meet its
distribution requirement for qualification as a REIT as set forth in Section 857
of the Code and to avoid any federal income or excise tax liability imposed by
the Code.

      


      “Holding Period” means, with
respect to Partnership Units acquired by Additional Limited Partners hereunder,
the period commencing on the date of issuance of such Units through and
including the fourth anniversary of such date of acquisition.

      


      “Indemnitee” means (i) any
Person made a party to a proceeding by reason of its status as the General
Partner or a director, officer or employee of the General Partner or the
Partnership, and (ii) such other Persons (including Affiliates of the General
Partner or the Partnership) as the General Partner may designate from time to
time, in its sole and absolute discretion.

      


      “Joint Venture” means any joint
venture or partnership arrangement in which the Partnership is a co-venturer or
general partner established to acquire or hold Properties, Mortgages or other
investments of the General Partner.

      


      “Limited Partner” means the
Original Limited Partner, any Person named as a Limited Partner on Exhibit A attached
hereto, and any Person who becomes a Substitute or Additional Limited Partner in
such person’s capacity as a Limited Partner in the Partnership.

      


      “Limited Partnership Interest”
means the ownership interest of a Limited Partner in the Partnership at any
particular time, including the right of such Limited Partner to any and all
benefits to which such Limited Partner may be entitled as provided in this
Agreement and in the Act, together with the obligations of such Limited Partner
to comply with all the provisions of this Agreement and of such
Act.

      


      “Liquidating Event” has the
meaning set forth in Section 2.4 hereof.

      


      “Loss” has the meaning provided
in Section 5.1(f) hereof.

      


      “LP Capital” means the
aggregate of Capital Contributions in cash or cash equivalents and the Agreed
Value of any non-cash contributions to the Partnership made by a Limited Partner
in accordance with Sections 4.1 and 4.2.

      


      “LP Return” means, with regard
to any Limited Partner, an amount equal to the aggregate cash dividends that
would have been payable to such Limited Partner with respect to the applicable
fiscal period if such Limited Partner had owned REIT Shares equal in number to
the product of Partnership Units owned by such Limited Partner during such
fiscal period multiplied by the Conversion Factor then in effect.

      


      “Mortgage” means, in connection
with mortgage financing provided, invested in or purchased by the Partnership,
any note, deed of trust, security interest or other evidence of indebtedness or
obligations, which is secured or collateralized by real property owned by the
borrower under such note, deed of trust, security interest or other evidence of
indebtedness or obligations.


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      “Net Capital Proceeds” means
the net cash proceeds received by the Partnership in connection with (i) any
Sale, (ii) any borrowing or refinancing of borrowing(s) by the Partnership,
(iii) any condemnation or deeding in lieu of condemnation of all or a portion of
any Property, (iv) any collection in respect of property, hazard, or casualty
insurance (but not business interruption insurance) or any damage award; or (v)
any other transaction the proceeds of which, in accordance with generally
accepted accounting principles, are considered to be capital in nature, in each
case, after deduction of (a) all costs and expenses incurred by the Partnership
with regard to such transactions (including, without limitation, any repayment
of any indebtedness required to be repaid as a result of such transaction or
which the General Partner elects to pay out of the proceeds of such transaction,
together with accrued interest and premium, if any, thereon and any sales
commissions or other costs or expenses due and payable to any Person in
connection therewith, including to a Partner or its Affiliates), and (b) all
amounts expended by the Partnership for the acquisition of additional
Properties, Mortgages or other investments or for capital repairs or
improvements to any Property with such cash proceeds.

      


      “New Allocations” has the
meaning set forth in Section 5.7.

      


      “Offer” has the meaning set
forth in Section 7.1(c)(ii).

      


      “Offering” means the initial
offer and sale by the General Partner of REIT Shares to the public.

      


      “Original Limited Partner” has
the meaning set forth in the preamble.

      


      “Partner” means any General
Partner or Limited Partner.

      


      “Partner Nonrecourse Debt Minimum
Gain” has the meaning set forth in Regulations Section
1.704-2(i).  A Partner’s share of Partner Nonrecourse Debt Minimum
Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).

      


      “Partnership” has the meaning
set forth in the preamble.

      


      “Partnership Interest” means an
ownership interest in the Partnership held by either a Limited Partner or the
General Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.

      


      “Partnership Minimum Gain” has
the meaning set forth in Regulations Section 1.704-2(b)(2).  In
accordance with Regulations Section 1.704-2(d), the amount of Partnership
Minimum Gain is determined by first computing, for each Partnership nonrecourse
liability, any gain the Partnership would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains.  A
Partner’s share of Partnership Minimum Gain shall be determined in accordance
with Regulations Section 1.704-2(g)(1).

      


      “Partnership Record Date” means
the record date established by the General Partner for the distribution of cash
pursuant to Section 5.2, which record date shall be the same as the record date
established by the General Partner for a distribution to its
stockholders.

      


      “Partnership Unit” means a
fractional, undivided share of the Partnership Interests of all Partners issued
hereunder.  The number of Partnership Units held by the General
Partner will, as of any relevant date, equal the difference between (a) the
product of the number of shares of the General Partner issued since the
formation of the General Partner through such relevant date (adjusted to reflect
any subdivisions or combinations of shares of the General Partner through such
relevant date), multiplied by the inverse of the Conversion Factor as of such
relevant date (i.e., one (1) divided by the Conversion Factor as of such
relevant date), and (b) the sum of (i) the number of Partnership Units of the
General Partner deemed purchased or redeemed pursuant to Section 6.9 since the
inception of the Partnership through such relevant date and (ii) all Partnership
Units held by the Original Limited Partner.  It is acknowledged that
if the Partnership makes a distribution of Partnership Units or subdivides or
combines the outstanding Partnership Units in order to give equivalent effect to
a dividend or distribution of the General Partner’s shares or a subdivision or
combination of the General Partner’s shares, then the Partnership Units held by
the General Partner will not be entitled to any such distribution of Partnership
Units or affected by any such subdivision or combination of Partnership Units
because the number of the General Partner’s Partnership Units will have already
been adjusted by virtue of the dividend or distribution of the General Partner’s
shares or the subdivision or combination of the General Partner’s
shares.


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      “Percentage Interest” means the
percentage ownership interest in the Partnership of each Partner, as determined
by dividing the number of Partnership Units owned by a Partner by the aggregate
number of Partnership Units owned by all Partners.

      


      “Person” means any individual,
partnership, corporation, joint venture, limited liability company, trust or
other entity.

      


      “Profit” has the meaning
provided in Section 5.1(f).

      


      “Property” means any real
property in which the Partnership holds an ownership interest, either directly
or pursuant to the Partnership’s ownership of an interest in a subsidiary that
owns an interest in any such real property.

      


      “Prospectus” means the final
prospectus delivered to purchasers of REIT Shares in the Offering.

      


      “Regulations” means the Federal
Income Tax Regulations, including temporary or proposed regulations, issued
under the Code, as amended and as hereafter amended from time to
time.  Reference to any particular provision of the Regulations shall
mean that provision of the Regulations on the date of this Agreement and any
successor provision of the Regulations.

      


      “REIT” means a real estate
investment trust under Sections 856 through 860 of the Code.

      


      “REIT Expenses” means (i) costs
and expenses relating to the formation and continuity of existence and operation
of the General Partner and any Subsidiaries thereof (which Subsidiaries shall,
for purposes of this Agreement, be included within the definition of General
Partner), including taxes, fees and assessments associated therewith, any and
all costs, expenses or fees payable to any director, officer, or employee of the
General Partner, (ii) costs and expenses relating to (A) any registration and
public offering of securities by the General Partner, the net proceeds of which
were used to make a contribution to the Partnership, and (B) all statements and
reports incidental thereto, including, without limitation, underwriting
discounts and selling commissions applicable to any such offering of securities,
and any costs and expenses associated with any claims made by any holders of
such securities or any underwriters or placement agents thereof, (iii) costs and
expenses associated with any repurchase of any securities by the General
Partner, (iv) costs and expenses associated with the preparation and filing, of
any periodic or other reports and communications by the General Partner under
federal, state or local laws or regulations, including filings with the
Commission, (v) costs and expenses associated with compliance by the General
Partner with laws, rules and regulations promulgated by any regulatory body,
including the Commission and any securities exchange, (vi) costs and expenses
associated with any section 401(k) plan, incentive plan, bonus plan or other
plan providing for compensation for the employees of the General Partner, (vii)
costs and expenses incurred by the General Partner relating to any issuance or
redemption of Partnership Interests or REIT Shares, and (viii) all other
operating or administrative costs of the General Partner incurred in the
ordinary course of its business on behalf of or in connection with the
Partnership.


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      “REIT Share” means a share of
common stock in the General Partner (or Successor Entity, as the case may
be).

      


      “REIT Shares Amount” means a
number of REIT Shares equal to the product of the number of Partnership Units
offered for exchange by an Exchanging Partner, multiplied by the Conversion
Factor as adjusted to and including the Specified Exchange Date; provided that
in the event the General Partner issues to all holders of REIT Shares rights,
options, warrants or convertible or exchangeable securities entitling the
stockholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the “Rights”), and the rights have
not expired at the Specified Exchange Date, then the REIT Shares Amount shall
also include the rights issuable to a holder of the REIT Shares on the record
date fixed for purposes of determining the holders of REIT Shares entitled to
Rights.

      


      “Sale” means any transaction or
series of transactions whereby (i) the Partnership directly or indirectly
(except as described in other subsections of this definitions) sells, grants,
transfers, conveys or relinquishes its ownership of any Property or portion
thereof, including the lease of any Property consisting of a building only, and
including any event with respect to any Property which gives rise to a
significant amount of insurance proceeds or condemnation awards; (ii) the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys or relinquishes its ownership
of all or substantially all the interest of the Partnership in any Joint Venture
in which it is a co-venturer or partner; (iii) any Joint Venture directly or
indirectly (except as described in other subsections of this definition) in
which the Partnership as a co-venturer or partner sells, grants, transfers,
conveys or relinquishes its ownership of any Property or portion thereof,
including any event with respect to any Property which gives rise to insurance
claims or condemnation awards; (iv) the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
conveys or relinquishes its interest in any Mortgage or portion thereof
(including with respect to any Mortgage, all payments thereunder or in
satisfaction thereof other than regularly scheduled interest payments) of
amounts owed pursuant to such Mortgage and any event with respect to a Mortgage
which gives rise to a significant amount of insurance proceeds or similar
awards, or (v) the Partnership directly or indirectly (except as described in
other subsections of this definition) sells, grants, transfers, conveys or
relinquishes its ownership of any other asset (other than investments in bank
accounts, money market funds or other current assets) not previously described
in this definition or any portion thereof.

      


      “Securities Act” means the
Securities Act of 1933, as amended.

      


      “Service” means the Internal
Revenue Service.

      


      “Specified Exchange Date” means
the first business day of the month first occurring after the expiration of 60
business days from the date of receipt by the General Partner of the Exchange
Notice.

      


      “Sponsor” means any Person
which (i) is directly or indirectly instrumental in organizing, wholly or in
part, United Development Funding IV, (ii) will manage or participate in the
management of United Development Funding IV, and any Affiliate of any such
Person, other than a Person whose only relationship with United Development
Funding IV is that of an independent property manager and whose only
compensation is as such, (iii) takes the initiative, directly or indirectly, in
founding or organizing United Development Funding IV, either alone or in
conjunction with one or more other Persons, (iv) receives a material
participation in United Development Funding IV in connection with the founding
or organizing of the business of United Development Funding IV, in consideration
of services or property, or both services and property, (v) has a substantial
number of relationships and contacts with United Development Funding IV, (vi)
possesses significant rights to control Properties, (vii) receives fees for
providing services to United Development Funding IV which are paid on a basis
that is not customary in the industry, or (viii) provides goods or services to
United Development Funding IV on a basis which was not negotiated at
arm's-length with United Development Funding IV.


      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      “Subsidiary” means, with
respect to any Person, any corporation or other entity of which a majority of
(i) the voting power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.

      


      “Subsidiary Partnership” means
any partnership, limited liability company or other entity taxed as a
partnership for federal income tax purposes in which interests are owned by the
General Partner or by a wholly-owned Subsidiary or Subsidiaries of the General
Partner.

      


      “Substitute Limited Partner”
means any Person admitted to the Partnership as a Limited Partner pursuant to
Section 9.3.

      


      “Successor Entity” has the
meaning provided in the definition of “Conversion Factor” contained
herein.

      


      “Survivor” has the meaning set
forth in Section 7.1(d).

      


      “Transaction” has the meaning
set forth in Section 7.1(c).

      


      “Transfer” has the meaning set
forth in Section 9.2(a).

      


      “Transfer Restriction Date”
means the effective date upon which UMTH General Services, L.P., a Delaware
limited partnership, shall cease acting as the advisor to the General Partner
under the terms of an advisory agreement entered into between UMTH General
Services, L.P. and the General Partner.

      


      “United Development Funding IV”
means United Development Funding IV, a Maryland real estate investment
trust.

      


      “Unpaid Return” means any
accrued LP Return or GP Minimum Return less all amounts distributed by the
Partnership to a Limited Partner or the General Partner in reduction
thereof.

      


      “Value” means, with respect to
any security, the average of the daily market price of such security for the ten
consecutive trading days immediately preceding the date as of which such Value
is to be determined.  The market price for each such trading day shall
be: (i) if the security is listed or admitted to trading on any securities
exchange, the sale price, regular way, on such day, or if no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
on such day; (ii) if the security is not listed or admitted to trading on any
securities exchange, the last reported sale price on such day or, if no sale
takes place on such day, the average of the closing bid and asked prices on such
day, as reported by a reliable quotation source designated by the General
Partner; or (iii) if the security is not listed or admitted to trading on any
securities exchange and no such last reported sale price or closing bid and
asked prices are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than ten days prior to the date in question) for which prices have
been so reported; provided, that if there are no bid and asked prices reported
during the ten days prior to the date in question, the value of the security
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate.  In the event the security includes any
additional rights, then the value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment,
appropriate.


      
        
           


        

        
          8

          
            

          

        

        
           


        

      


      ARTICLE
II


      ARTICLE
IVPARTNERSHIP FORMATION AND IDENTIFICATION

      


      2.1           Formation.  The
Partnership is a limited partnership formed pursuant to the Act and upon the
terms and conditions set forth in this Agreement.

      


      2.2           Name,
Office and Registered Agent.  The
name of the Partnership is “United Development Funding IV Operating Partnership,
L.P.”  The principal place of business of the Partnership shall be
1301 Municipal Way, Suite 100, Grapevine, Texas 76051.  The General
Partner may at any time change the location of such office, provided the General
Partner gives notice to the Partners of any such change.  The name and
address of the Partnership’s registered agent is Corporation Service Company,
2711 Centerville Road, Suite 400, in the City of Wilmington, County of New
Castle 19808.  The sole duty of the registered agent as such is to
forward to the Partnership any notice that is served on it as registered
agent.

      


      2.3           Partners.

      


      (a)           The
general partner of the Partnership is United Development Funding
IV.  Its principal place of business is the same as that of the
Partnership.

      


      (b)           The
limited partners are those Persons identified as Limited Partners (including the
Original Limited Partner) on Exhibit A hereto, as
it may be amended from time to time.

      


      2.4           Term and
Dissolution.

      


      (a)           The
Partnership shall have perpetual duration, except that the Partnership shall be
dissolved earlier upon the first to occur of any of the following events (each,
a “Liquidating
Event”):

      


      (i)          
 the occurrence of an Event of Bankruptcy as to a General Partner or the
dissolution, death, removal or withdrawal of a General Partner unless the
business of the Partnership is continued pursuant to Section 7.3(b), provided,
that if a General Partner is on the date of such occurrence a partnership, the
dissolution of such General Partner as a result of the dissolution, death,
withdrawal, removal or Event of Bankruptcy of a partner in such partnership
shall not be an event of dissolution of the Partnership if the business of such
General Partner is continued by the remaining partner or partners thereof,
either alone or with additional partners, and such General Partner and such
partners comply with any other applicable requirements of this
Agreement;

      


      (ii)          
 the passage of 90 days after the sale or other disposition of all or
substantially all of the assets of the Partnership (provided, that if the
Partnership receives an installment obligation as consideration for such sale or
other disposition, the Partnership shall continue, unless sooner dissolved under
the provisions of this Agreement, until such time as such obligation is paid in
full);

      


      (iii)           the
exchange of all Limited Partnership Interests (other than any of such interests
held by the General Partner or Affiliates of the General Partner);
or

      


      (iv)           the
election by the General Partner that the Partnership should be
dissolved.


      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      (b)           Upon
dissolution of the Partnership (unless the business of the Partnership is
continued pursuant to Section 7.3(b)), the General Partner (or its trustee,
receiver, successor or legal representative) shall amend or cancel the
Certificate and liquidate the Partnership’s assets and apply and distribute the
proceeds thereof in accordance with Section 5.6.  Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership’s debts and
obligations), or (ii) distribute the assets to the Partners in
kind.

      


      2.5           Filing of
Certificate and Perfection of Limited Partnership.  The
General Partner shall execute, acknowledge, record and file, at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.

      


      2.6           Certificates
Describing Partnership Units.  At
the request of a Limited Partner, the General Partner may, at its option and in
its discretion, issue a certificate summarizing the terms of such Limited
Partner’s interest in the Partnership, including the number of Partnership Units
owned as of the date of such certificate.  If issued, any such
certificates (a) shall be in form and substance as approved by the General
Partner, (b) shall not be negotiable, and (c) shall bear a legend substantially
similar to the following:

      


      


      “This certificate is not
negotiable.  The Partnership Units represented by this certificate are
governed by and transferable only in accordance with the provisions of the
Agreement of Limited Partnership of United Development Funding IV Operating
Partnership, L.P., as amended from time to time.”

      


      ARTICLE
III


      ARTICLE VIBUSINESS
OF THE PARTNERSHIP

      


      The
purpose and nature of the business to be conducted by the Partnership is (a) to
conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act, provided, however, that such business shall be
limited to and conducted in such a manner as to permit the General Partner at
all times to qualify as a REIT, unless the General Partner otherwise ceases to
qualify as a REIT, (b) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, and (c) to do anything
necessary or incidental to the foregoing.  In connection with the
foregoing, and without limiting the General Partner’s right in its sole and
absolute discretion to cease qualifying as a REIT, the Partners acknowledge that
the General Partner’s current status as a REIT and the avoidance of income and
excise taxes on the General Partner inures to the benefit of all the Partners
and not solely to the General Partner.  Notwithstanding the foregoing,
the Limited Partners agree that the General Partner may terminate its status as
a REIT under the Code at any time to the full extent permitted under its
Declaration of Trust.  The General Partner shall also be empowered to
do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for
purposes of Section 7704 of the Code.

      


      ARTICLE
IV


      ARTICLE VIIICAPITAL
CONTRIBUTIONS AND ACCOUNTS

      


      4.1           Capital
Contributions.  The
General Partner and the Original Limited Partner have made Capital Contributions
to the Partnership in exchange for the Partnership Units set forth opposite
their names on Exhibit
A.  At such time as new limited partners are admitted into the
Partnership (each, an “Additional Limited Partner”
and collectively “Additional
Limited Partners”), each Additional Limited Partner shall make Capital
Contributions as set forth opposite their names on Exhibit A, as it may
be amended from time to time.  Exhibit A shall be
deemed automatically amended upon, and the General Partner may, without the
approval of any other Partner, attach an amended Exhibit A to this
Agreement to reflect: (a) the issuance of Partnership Units issued to Additional
Limited Partners or to any existing Limited Partner pursuant to Section 4.2, (b)
any Partnership Units purchased or redeemed pursuant to Section 6.9, (c) any
redemption or purchase of Partnership Units by the Partnership or the General
Partner by reason of the exercise by a Limited Partner of the Exchange Right,
and (d) any purchase by the General Partner (or any of its Affiliates) of
Partnership Units pursuant to the Call Right.


      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      4.2           Additional Capital Contributions and Issuances of
Additional Partnership Interests.

      


      Except as
provided in this Section 4.2 or in Section 4.3, the Partners shall have no right
or obligation to make any additional Capital Contributions or loans to the
Partnership.  The General Partner may contribute additional capital to
the Partnership, from time to time, and receive additional Partnership Units in
respect thereof in the manner contemplated by this Section 4.2.

      


      (a)           Issuances
of Additional Partnership Interests.

      


      (i)           General.  The
General Partner is hereby authorized to cause the Partnership to issue
additional Partnership Interests in the form of Partnership Units for any
Partnership purpose, at any time or from time to time, to the Partners
(including the General Partner) or to other Persons for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners.  Any additional Partnership Interests issued thereby may be
issued in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative participating, optional or
other special rights, powers and duties, including rights, powers and duties
senior to Limited Partnership Interests, all as shall be determined by the
General Partner in its sole and absolute discretion and without the approval of
any Limited Partner, subject to Delaware law, including, without limitation, (A)
the allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of Partnership Interests; (B) the right of each
such class or series of Partnership Interests to share in Partnership
distributions; and (C) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; provided,
however, that no additional Partnership Interests shall be issued to the General
Partner or the Original Limited Partner unless:

      


      (1)           the
additional Partnership Interests are issued in connection with an issuance of
REIT Shares or other interests in the General Partner, which shares or interests
have designations, preferences and other rights such that the economic interests
are substantially similar to the designations, preferences and other rights of
the additional Partnership Interests issued to the General Partner by the
Partnership in accordance with this Section 4.2, and the General Partner, on its
own or with the Original Limited Partner, shall make a Capital Contribution to
the Partnership in an amount equal to the aggregate proceeds raised in
connection with the issuance of such shares of stock of or other interests in
the General Partner;

      


      (2)           the
additional Partnership Interests are issued in exchange for property or other
assets owned by the General Partner or Original Limited Partner with a fair
market value, as determined by the General Partner, in good faith, equal to the
value of the Partnership Interests; or


      
        
           


        

        
          11

          
            

          

        

        
           


        

      


      (3)           the
additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests.

      


      (ii)           Issuance of Additional
Securities.  The General Partner shall not issue any additional
REIT Shares (other than REIT Shares issued in connection with an exchange made
pursuant to Section 8.5) or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares (collectively, “Additional Securities”) other
than to all holders of REIT Shares, unless (A) the General Partner shall cause
the Partnership to issue to the General Partner (or to the General Partner and
the Original Limited Partner), as the General Partner may designate, Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
of the Partnership having designations, preferences and other rights such that
the economic interests are substantially similar to those of the Additional
Securities, and (B) the General Partner (or the General Partner and the Original
Limited Partner) contributes the proceeds from the issuance of such Additional
Securities and from any exercise of rights contained in such Additional
Securities, directly and through the General Partner (or the General Partner and
the Original Limited Partner), to the Partnership; provided, however, that the
General Partner is allowed to issue Additional Securities in connection with an
acquisition of a Property, Mortgage or other asset to be held directly by the
General Partner.  Without limiting the foregoing, the General Partner
is expressly authorized to issue Additional Securities for less than fair market
value, and to cause the Partnership to issue to the General Partner (or to the
General Partner and the Original Limited Partner) corresponding Partnership
Interests, so long as (1) the General Partner concludes in good faith that such
issuance is in the best interests of the General Partner and the Partnership,
including without limitation, the issuance of REIT Shares and corresponding
Partnership Units pursuant to an employee share purchase plan providing for
employee purchases of REIT Shares at a discount from fair market value or
employee stock options that have an exercise price that is less than the fair
market value of the REIT Shares, either at the time of issuance or at the time
of exercise, and (2) the General Partner contributes directly or directly and
through the Original Limited Partnership all proceeds from such issuance to the
Partnership.

      


      (b)           Certain Deemed Contributions
of Proceeds of Issuance of REIT Shares.  In connection with any
and all issuances of REIT Shares, the General Partner shall make directly or
directly and through the Original Limited Partner Capital Contributions to the
Partnership of the proceeds from such issuances, provided, that if the proceeds
actually received and contributed by the General Partner are less than the gross
proceeds of such issuance as a result of any underwriter’s discount or other
fees or expenses paid or incurred in connection with such issuance, then the
General Partner (or the General Partner together with the Original Limited
Partner, as applicable) shall be deemed to have made Capital Contributions to
the Partnership in the aggregate amount of the gross proceeds of such issuance
and the Partnership shall be deemed simultaneously to have paid such offering
expenses in accordance with Section 6.5 and in connection with the required
issuance of additional Partnership Units for such Capital Contributions pursuant
to Section 4.2(a).

      


      (c)           Original Limited Partner
Deemed Contributions.  In the event the Original Limited
Partner elects to defer any distribution of cash hereunder to be made to it
pursuant to Section 5.2(a), then such amount shall be deemed to be an additional
contribution of capital to the Partnership by the Original Limited Partner,
which shall be added to the Original Limited Partner’s Capital Contribution to
the Partnership and the Original Limited Partner’s Capital Account as
established and maintained under Section 4.4.

      


      4.3           Additional
Funding.  If
the General Partner determines that it is in the best interests of the
Partnership to provide for additional Partnership funds (“Additional Funds”) for any
Partnership purpose, the General Partner may (a) cause the Partnership to obtain
such funds from outside borrowings, or (b) elect to have the General Partner or
any of its Affiliates provide such Additional Funds to the Partnership through
loans or otherwise.


      
        
           


        

        
          12

          
            

          

        

        
           


        

      


      4.4           Capital
Accounts.  A
separate capital account (a “Capital Account”) shall be
established and maintained for each Partner in accordance with Regulations
Section 1.704-1(b)(2)(iv).  If (a) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a de minimis
Capital Contribution, (b) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property as consideration for the redemption of
a Partnership Interest, or (c) the Partnership is liquidated within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue
the property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section 1.704-
l(b)(2)(iv)(f).  When the Partnership’s property is revalued by the
General Partner, the Capital Accounts of the Partners shall be adjusted in
accordance with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which
generally require such Capital Accounts to be adjusted to reflect the manner in
which the unrealized gain or loss inherent in such property (that has not been
reflected in the Capital Accounts previously) would be allocated among the
Partners pursuant to Section 5.1 if there were a taxable disposition of such
property for its fair market value (as determined by the General Partner, in its
sole and absolute discretion, and taking into account Section 7701(g) of the
Code) on the date of the revaluation.

      


      4.5           Percentage
Interests.  If
the number of outstanding Partnership Units increases or decreases during a
taxable year, each Partner’s Percentage Interest shall be adjusted by the
General Partner effective as of the date of each such increase or decrease to a
percentage equal to the number of Partnership Units held by such Partner divided
by the aggregate number of Partnership Units outstanding after giving effect to
such increase or decrease.  In such event, the General Partner shall
revalue the property of the Partnership and the Capital Account for each Partner
shall be adjusted as set forth in Section 4.4.  If the Partners’
Percentage Interests are adjusted pursuant to this Section 4.5, the Profit and
Loss for the taxable year in which the adjustment occurs shall be prorated
between the part of the year ending on the day when the Partnership’s property
is revalued by the General Partner and the part of the year beginning on the
following day and, as so divided, shall be allocated to the Partners based on
their Percentage Interests before adjustment, and their adjusted Percentage
Interests, respectively, either (a) as if the taxable year had ended on the date
of the adjustment or (b) based on the number of days in each
part.  The General Partner, in its sole and absolute discretion, shall
determine which method shall be used to allocate Profit and Loss for the taxable
year in which an adjustment occurs, as may be required or permitted under
Section 706 of the Code.

      


      4.6           No
Interest on Contributions.  No
Partner shall be entitled to interest on its Capital Contribution.

      


      4.7           Return of
Capital Contributions.  No
Partner shall be entitled to withdraw any part of its Capital Contribution or
its Capital Account or to receive any distribution from the Partnership, except
as specifically provided in this Agreement.  Except as otherwise
provided herein, there shall be no obligation to return to any Partner or
withdrawn Partner any part of such Partner’s Capital Contribution for so long as
the Partnership continues in existence.

      


      4.8           No
Third-Party Beneficiary.  No
creditor or other third party having dealings with the Partnership shall have
the right to enforce the right or obligation of any Partner to make Capital
Contributions or loans or to pursue any other right or remedy hereunder or at
law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns.  None of
the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners.  In addition, it is the
intent of the parties hereto that no distribution to any Limited Partner shall
be deemed a return of money or other property in violation of the
Act.  However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General
Partner.  Without limiting the generality of the foregoing, a deficit
Capital Account of a Partner shall not be deemed to be a liability of such
Partner nor an asset or property of the Partnership.


      
        
           


        

        
          13

          
            

          

        

        
           


        

      


      ARTICLE
V


      ARTICLE XPROFIT AND
LOSS; DISTRIBUTIONS

      


      5.1           Allocation
of Profit and Loss.

      


      (a)           After
giving effect to the special allocations set forth in Sections 5.1(b), (c) and
(d), Profit for each fiscal year of the Partnership shall be allocated as
follows: (i) first to the Partners, pro rata, in amounts equal to the amount of
cash distributed to the Partners pursuant to Section 5.2(a) with respect to such
fiscal year; (ii) second, to the extent the amount of Profit for such fiscal
year exceeds the amount of cash distributed to the Partners pursuant to Section
5.2(a), such excess shall be allocated to the General Partner and the Limited
Partners in amounts and in proportion to the cumulative Loss allocated to the
General Partner pursuant to clause (y) of this Section 5.1(a) and the cumulative
Loss allocated to the Limited Partners pursuant to clause (x) of this Section
5.1(a), respectively; and (iii) finally, the balance, if any, of Profit shall be
allocated to the Partners in accordance with and in proportion to their
respective Percentage Interests.  Notwithstanding the foregoing,
however, it is the intent of the Partners that allocations of Profit to the
Limited Partners be such that the amount of Profit allocated to each Limited
Partner be equal to the amount of income that would have been allocated to such
Limited Partner with respect to the applicable fiscal period if such Limited
Partner had owned REIT Shares equal in number to the number of Partnership Units
owned by such Limited Partner during such fiscal period, and if, for any reason,
the foregoing allocations of Profit result in any material variation from this
concept, Profit shall be allocated to each Limited Partner in an amount equal to
the aggregate amount of income that would have been allocated to such Limited
Partner with respect to the applicable fiscal period if such Limited Partner had
owned REIT Shares equal in number to the number of Partnership Units owned by
such Limited Partner during such fiscal period.  After giving effect
to the special allocations set forth in Sections 5.1(b), (c) and (d), Loss for a
fiscal year of the Partnership shall be allocated as follows: (w) first, to the
Partners, pro rata, in accordance with and in proportion to their respective
Partnership Interests, until the cumulative Loss allocated to each Partner under
this clause (w) equals the cumulative Profit allocated to each Partner under
clause (ii) of this Section 5.1(a); (x) second, to the Limited Partners in an
amount equal to each such Limited Partner’s Capital Account balance prior to the
allocation made under this clause (x); (y) third, to the General Partner in an
amount equal to the General Partner’s Capital Account balance prior to the
allocation made under this clause (y); and (z) fourth, to the General Partner to
the extent that any further allocation of Loss to Limited Partners would result
in any such Limited Partners having a deficit balance in their Capital
Accounts.

      


      (b)           Notwithstanding
any provision to the contrary herein, (i) any expense of the Partnership that is
a “nonrecourse deduction” within the meaning of Regulations Section
1.704-2(b)(1) shall be allocated in accordance with the Partners’ respective
Percentage Interests, (ii) any expense of the Partnership that is a “partner
nonrecourse deduction” within the meaning of Regulations Section 1.704-2(i)(2)
shall be allocated to the Partner that bears the “economic risk of loss” of such
deduction in accordance with Regulations Section 1.704-2(i)(1), (iii) if there
is a net decrease in Partnership Minimum Gain within the meaning of Regulations
Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the
exceptions set forth in Regulations Section 1.704-2(f)(2), (3), (4) and (5),
items of gain and income shall be allocated among the Partners in accordance
with Regulations Section 1.704-2(f) and the ordering rules contained in
Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner
nonrecourse debt minimum gain within the meaning of Regulations Section
1.704-2(i)(4) for any Partnership taxable year, then, subject to the exceptions
set forth in Regulations Section 1.704-2(g), items of gain and income shall be
allocated among the Partners, in accordance with Regulations Section
1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j).  A Partner’s “interest in partnership profits” for
purposes of determining its share of the nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752- 3(a)(3) shall be
such Partner’s Percentage Interest.


      
        
           


        

        
          14

          
            

          

        

        
           


        

      


      (c)           If
a Partner receives in any taxable year an adjustment, allocation, or
distribution described in subparagraphs (4), (5), or (6) of Regulations Section
1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such
Partner’s Capital Account that exceeds the sum of such Partner’s shares of
Partnership Minimum Gain and Partner nonrecourse debt minimum gain, as
determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i),
such Partner shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such deficit Capital Account balance as quickly as
possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d).  After the occurrence of an allocation of income
or gain to a Partner in accordance with this Section 5.1(c), to the extent
permitted by Regulations Section 1.704-1(b), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.1(c).

      


      (d)           Loss
shall not be allocated to a Limited Partner to the extent that such allocation
would cause a deficit in such Partner’s Capital Account (after reduction to
reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
and (6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain
and Partner nonrecourse debt minimum gain.  Any Loss in excess of that
limitation shall be allocated to the General Partner.  After the
occurrence of an allocation of Loss to the General Partner in accordance with
this Section 5.1(d), to the extent permitted by Regulations Section 1.704-1(b),
Profit shall be allocated to the General Partner in an amount necessary to
offset the Loss previously allocated to the General Partner under this Section
5.1(d).

      


      (e)           If
a Partner transfers any part or all of its Partnership Interest, the
distributive shares of the various items of Profit and Loss allocable among the
Partners during such fiscal year of the Partnership shall be allocated between
the transferor and the transferee Partner either (i) as if the Partnership’s
fiscal year had ended on the date of the transfer, or (ii) based on the number
of days of such fiscal year that each was a Partner without regard to the
results of Partnership activities in the respective portions of such fiscal year
in which the transferor and the transferee were Partners.  The General
Partner, in its sole and absolute discretion, shall determine which method shall
be used to allocate the distributive shares of the various items of Profit and
Loss between the transferor and the transferee Partner.

      


      (f)           “Profit” and “Loss” and any items of income,
gain, expense, or loss referred to in this Agreement shall be determined in
accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specially allocated pursuant
to Sections 5.1(b), 5.1(c), or 5.1(d).  All allocations of income,
Profit, gain, Loss, and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.1, except as otherwise required by Section 704(c) of the
Code and Regulations Section 1.704-1(b)(4).  The General Partner shall
have the authority, in its sole and absolute discretion and without the need for
consent from any Partner, to elect the method or methods to be used by the
Partnership for allocating items of income, gain, expense and deductions as
required by Section 704(c) of the Code, including election of a method that may
result in one or more Partners receiving or being allocated a disproportionately
larger share of items of Partnership income, gain, expense or deduction, and any
such election shall be binding on all Partners.


      
        
           


        

        
          15

          
            

          

        

        
           


        

      


      5.2           Distributions
of Cash.

      


      (a)           The
Partnership shall distribute cash on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the General
Partner in its sole and absolute discretion, to the Partners who are Partners on
the Partnership Record Date with respect to such quarter (or other distribution
period) in the following manner: (i) first, to the General Partner in an amount
equal to the GP Minimum Return with respect to the fiscal year of the General
Partner; (ii) second, to the Limited Partners pro rata among them in proportion
to the their respective Unpaid Return, if any, owing to each such Limited
Partners with respect to prior fiscal years, in an amount equal to their
respective Unpaid Return for such prior fiscal years owing to each such Limited
Partner; (iii) third, after the establishment of reasonable cash reserves to
meet REIT Expenses and other obligations of the Partnership, as determined in
the sole and absolute discretion of the General Partner, to the General Partner
and the Limited Partners in such aggregate amount as may be determined by the
General Partner in its sole and absolute discretion to be allocated among the
General Partner and the Limited Partners such that each Limited Partner will
receive an amount equal to its LP Return for such fiscal year; and (iv) finally,
to the Partners in accordance with and in proportion to their respective
Percentage Interests; provided, however, that if a new or existing Partner
acquires an additional Partnership Interest in exchange for a Capital
Contribution on any date other than a Partnership Record Date, the cash
distribution attributable to such additional Partnership Interest relating to
the Partnership Record Date next following the issuance of such additional
Partnership Interest shall be reduced to the proportion thereof which equals (i)
the number of days that such additional Partnership Interest is held by such
Partner divided by (ii) the number of days between such Partnership Record Date
and the immediately preceding Partnership Record
Date.  Notwithstanding the foregoing, however, the Original Limited
Partner may, in its sole and absolute discretion, elect to defer any
distribution to be made to it, in which case the amount so deferred shall be
deemed to be an additional Capital Contribution made on behalf of the Original
Limited Partner under Section 4.2(c), to be distributed to the Original Limited
Partner upon liquidation of the Partnership under Section 5.6, or at such time
as the Original Limited Partner may otherwise be allowed to withdraw from the
Partnership after the Transfer Restriction Date.

      


      (b)           Notwithstanding
any other provision of this Agreement, the General Partner is authorized to take
any action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation, the
requirements of Sections 1441, 1442, 1445 and 1446 of the Code.  To
the extent that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to a Partner or its assignee (including by reason of Section 1446 of the
Code), either (i) if the actual amount to be distributed to the Partner or
assignee equals or exceeds the amount required to be withheld by the
Partnership, the amount withheld shall be treated as a distribution of cash in
the amount of such withholding to such Partner or assignee, or (ii) if the
actual amount to be distributed to the Partner or assignee is less than the
amount required to be withheld by the Partnership, the amount required to be
withheld shall be treated as a loan (a “Partnership Loan”) from the
Partnership to the Partner or assignee on the day the Partnership pays over such
amount to a taxing authority.  A Partnership Loan shall be repaid
through withholding by the Partnership with respect to subsequent distributions
to the applicable Partner or assignee.  In the event that a Limited
Partner (a “Defaulting Limited
Partner”) fails to pay any amount owed to the Partnership with respect to
the Partnership Loan within 15 days after demand for payment thereof is made by
the Partnership on the Limited Partner, the General Partner, in its sole and
absolute discretion, may elect to make the payment to the Partnership on behalf
of such Defaulting Limited Partner.  In such event, on the date of
payment, the General Partner shall be deemed to have extended a loan (a “General Partner Loan”) to the
Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount.  Without limitation,
the General Partner shall have the right to receive any distributions that
otherwise would be made by the Partnership to the Defaulting Limited Partner
until such time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
received by the Defaulting Limited Partner and immediately paid to the General
Partner.  Any amounts treated as a Partnership Loan or a General
Partner Loan pursuant to this Section 5.2(b) shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal, or
(B) the maximum lawful rate of interest on such obligation, such interest to
accrue from the date the Partnership or the General Partner, as applicable, is
deemed to extend the loan until such loan is repaid in full.


      
        
           


        

        
          16

          
            

          

        

        
           


        

      


      (c)           To
the extent not utilized for expenses of the Partnership or for investment in
additional Properties, the General Partner may, in its discretion, cause the
Partnership to distribute Net Capital Proceeds in such amount as shall be
determined by the General Partner in its discretion in accordance with the
provisions of Section 5.2(a).

      


      (d)           In
no event may a Partner receive a distribution of cash with respect to a
Partnership Unit if such Partner is entitled to receive a cash dividend as the
holder of record of a REIT Share for which all or part of such Partnership Unit
has been or will be exchanged, and the Unpaid Return with respect to such
Partnership Unit shall be deemed to be reduced by the amount of any such cash
dividend.

      


      5.3           REIT
Distribution Requirements.  The
General Partner shall use its reasonable efforts to cause the Partnership to
distribute amounts sufficient to enable the General Partner to pay stockholder
dividends that will allow the General Partner to (a) meet its distribution
requirement for qualification as a REIT as set forth in Section 857 of the Code
and (b) avoid any federal income or excise tax liability imposed by the
Code.

      


      5.4           No Right
to Distributions in Kind.   No
Partner shall be entitled to demand property other than cash in connection with
any distributions by the Partnership.

      


      5.5           Limitations
on Return of Capital Contributions.  Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make a distribution
that includes a return of all or part of a Partner’s Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of its Capital Contribution, does not exceed the fair market value of the
Partnership’s assets.

      


      5.6           Distributions
Upon Liquidation.  Upon
liquidation of the Partnership, after payment of, or adequate provision for,
debts and obligations of the Partnership, including any Partner loans, any
remaining assets of the Partnership shall be distributed to all Partners with
positive Capital Accounts in accordance with their respective positive Capital
Account balances.  For purposes of the preceding sentence, the Capital
Account of each Partner shall be determined after all adjustments made in
accordance with Sections 5.1 and 5.2 resulting from Partnership operations and
from all sales and dispositions of all or any part of the Partnership’s assets
have been made.  To the extent deemed advisable by the General
Partner, appropriate arrangements (including the use of a liquidating trust) may
be made to assure that adequate funds are available to pay any contingent debts
or obligations.

      


      5.7           Substantial
Economic Effect.  It
is the intent of the Partners that the allocations of Profit and Loss under this
Agreement have substantial economic effect (or be consistent with the Partners’
interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the
Code as interpreted by the Regulations promulgated pursuant
thereto.  Article V and other relevant provisions of this Agreement
shall be interpreted in a manner consistent with such intent.  If, for
any reason, the General Partner deems it necessary in order to comply with the
Code, the General Partner may, and is hereby authorized and directed to,
allocate income, gain, loss, deduction or credit (or items thereof) arising in
any year differently than as provided for in this Article if, and to the extent,
(i) that allocating income, gain, loss, deduction or credit (or item thereof)
would cause the determinations and allocations of each Partner's distributive
share of income, gain, loss, deduction or credit (or item thereof) not to be
permitted by the Code and any Regulations promulgated thereunder, or (ii) such
allocation would be inconsistent with a Partner's interest in the Partnership
taking into consideration all facts and circumstances.  Any allocation
made pursuant to this Section shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Agreement, and no further
amendment of this Agreement or approval by any Partner shall be required to
effectuate such allocation.  In making any such allocations (“New Allocations”) under this
Section, the General Partner is authorized to act in reliance upon advice of
counsel to the Partnership or the Partnership's regular certified public
accountants that, in their opinion, after examining the relevant provisions of
the Code and any current or future proposed or final Regulations thereunder, the
New Allocations are necessary in order to ensure that, in either the
then-current year or in any preceding year, each Partner's distributive share of
income, gain, loss, deduction or credit (or items thereof) are determined and
allocated in accordance with the Code and the Partner's interests in the
Partnership.  New Allocations made by the General Partner in reliance
upon the advice of counsel and accountants as described above shall be deemed to
be made in the best interests of the Partnership and all of the Partners
consistent with the duties of the General Partner hereunder and any such New
Allocations shall not give rise to any claim or cause of action by any Partner
against the Partnership or the General Partner.


      
        
           


        

        
          17

          
            

          

        

        
           


        

      


      ARTICLE
VI

      RIGHTS,
OBLIGATIONS AND

      POWERS
OF THE GENERAL PARTNER

      


      6.1           Management
of the Partnership.

      


      (a)           Except
as otherwise expressly provided in this Agreement, the General Partner shall
have full, complete and exclusive discretion to manage and control the business
of the Partnership for the purposes herein stated, and shall make all decisions
affecting the business and assets of the Partnership.  Subject to the
restrictions specifically contained in this Agreement, the powers and
obligations, as the context requires, of the General Partner shall include,
without limitation, the authority to take the following actions on behalf of the
Partnership:

      


      (i)          
 to acquire, purchase, own, operate, lease and dispose of any real property
and any other property or assets including, but not limited to notes, Mortgages,
partnership or joint venture interests or securities, that the General Partner
determines are necessary or appropriate or in the best interests of the business
of the Partnership;

       

      (ii)           to
develop land, construct buildings and make other improvements on the Properties
owned or leased by the Partnership;

      


      (iii)          to
authorize, issue, sell, redeem or otherwise purchase any Partnership Interests
or any securities (including secured and unsecured debt obligations of the
Partnership, debt obligations of the Partnership convertible into any class or
series of Partnership Interests, or options, rights, warrants or appreciation
rights relating to any Partnership Interests) of the Partnership;

      


      (iv)          to
borrow or lend money for the Partnership, issue or receive evidences of
indebtedness in connection therewith, refinance, increase the amount of, modify,
amend or chance the terms of, or extend the time for the payment of, any such
indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership’s assets;


      
        
           


        

        
          18

          
            

          

        

        
           


        

      


      (v)           to
pay, either directly or by reimbursement, for all operating costs and general
administrative expenses of the Partnership to third parties or to the General
Partner or its Affiliates as set forth in this Agreement;

      


      (vi)          to
guarantee or become a co-maker of indebtedness of the General Partner or any
Subsidiary thereof, refinance, increase the amount of, modify, amend or change
the terms of, or extend the time for the payment of, any such guarantee or
indebtedness, and secure such guarantee or indebtedness by mortgage, deed of
trust, pledge or other lien on the Partnership’s assets;

      


      (vii)         to
use assets of the Partnership (including, without limitation, cash on hand) for
any purpose consistent with this Agreement, including, without limitation,
payment, either directly or by reimbursement, of all operating costs and general
administrative expenses of the General Partner, the Partnership or any
Subsidiary of either, to third parties or to the General Partner as set forth in
this Agreement;

      


      (viii)        to
lease all or any portion of any of the Partnership’s assets, whether or not the
terms of such leases extend beyond the termination date of the Partnership and
whether or not any portion of the Partnership’s assets so leased are to be
occupied by the lessee, or, in turn, subleased in whole or in part to others,
for such consideration and on such terms as the General Partner may
determine;

      


      (ix)         
 to prosecute, defend, arbitrate, or compromise any and all claims or
liabilities in favor of or against the Partnership, on such terms and in such
manner as the General Partner may reasonably determine, and similarly, to
prosecute, settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership’s assets;

      


      (x)         
  to file applications, communicate, and otherwise deal with any and
all governmental agencies having jurisdiction over, or in any way affecting, the
Partnership’s assets or any other aspect of the Partnership
business;

      


      (xi)          
to make or revoke any election permitted or required of the Partnership by any
taxing authority;

      


      (xii)          to
maintain such insurance coverage for public liability, fire and casualty, and
any and all other insurance for the protection of the Partnership, for the
conservation of Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;

      


      (xiii)         to
determine whether or not to apply any insurance proceeds for any Property to the
restoration of such Property or to distribute the same;

      


      (xiv)         to
establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain
legal counsel, accountants, consultants, real estate brokers, and such other
persons, as the General Partner may deem necessary or appropriate in connection
with the Partnership business and to pay such persons remuneration as the
General Partner may deem reasonable and proper;

      


      (xv)          to
retain other services of any kind or nature in connection with Partnership
business and to pay such remuneration as the General Partner may deem reasonable
and proper for same;


      
        
           


        

        
          19

          
            

          

        

        
           


        

      


      (xvi)         to
negotiate and conclude agreements on behalf of the Partnership with respect to
any of the rights, powers and authority conferred upon the General
Partner;

      


      (xvii)        to
maintain accurate accounting records and to file promptly all federal, state and
local income tax returns on behalf of the Partnership;

      


      (xviii)       to
distribute Partnership cash or other Partnership assets in accordance with this
Agreement;

      


      (xix)         to
form or acquire an interest in, and contribute property to, any further limited
or general partnerships, joint ventures, limited liability companies or other
entities or relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an equity interest
from time to time);

      


      (xx)          to
establish Partnership reserves for working capital, capital expenditures,
contingent liabilities, or any other valid Partnership purpose;

      


      (xxi)         to
merge, consolidate or combine the Partnership with or into another
Person;

      


      (xxii)        to
do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for
purposes of Section 7704 of the Code; and

      


      (xxiii)       to
take such other action, execute, acknowledge, swear to or deliver such other
documents and instruments, and perform any and all other acts that the General
Partner deems necessary or appropriate for the formation, continuation and
conduct of the business and affairs of the Partnership (including, without
limitation, all actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner voluntarily terminates its
REIT status) and to possess and enjoy all of the rights and powers of a general
partner as provided by the Act.

      


      (b)           Except
as otherwise provided herein, to the extent the duties of the General Partner
require expenditures of funds to be paid to third parties, the General Partner
shall not have any obligations hereunder except to apply Partnership funds to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.

      


      (c)           Any
actions taken by the General Partner pursuant to its authority under this
Agreement on behalf of the Partnership regarding the approval of any transaction
between the Partnership and the Sponsor, Advisor, a member of the Board of
Directors of United Development Funding IV or any Affiliate thereof, shall
require a finding by a majority of the members of the Board of Directors of
United Development Funding IV that such actions are fair and reasonable to
United Development Funding IV and the Partnership on terms and conditions not
less favorable to United Development Funding IV or the Partnership, as
applicable, than those available from unaffiliated third parties.

      


      6.2           Delegation
of Authority.  The
General Partner may delegate any or all of its powers, rights and obligations
hereunder, and may appoint, employ, contract or otherwise deal with any Person
(including without limitation officers or other agents of the Partnership or the
General Partner appointed by the General Partner) for the transaction of the
business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General Partner
may approve.


      
        
           


        

        
          20

          
            

          

        

        
           


        

      


      6.3           Indemnification
and Exculpation of Indemnitees.

      


      (a)           The
Partnership shall indemnify an Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including reasonable
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, as a result
of acting on behalf of or performing services for the Partnership, only if it is
determined that (i) the Indemnitee acted in good faith and (ii) that the
Indemnitee reasonably believed that the act or omission was in the Partnership’s
best interests, or if the act or omission was outside the Indemnitee’s official
capacity as a general partner of the Partnership, that the act or omission was
at least not opposed to the Partnership’s best
interests.  Notwithstanding the foregoing, each Indemnitee shall be
liable, responsible and accountable, and the Partnership shall not be liable to
an Indemnitee, other than for reasonable expenses actually incurred by the
Indemnitee with respect to a proceeding in which (i) the Indemnitee is found
liable on the basis that the Indemnitee improperly received personal benefit,
whether or not the benefit resulted from an action taken in the Indemnitee’s
official capacity, or (ii) the Indemnitee is found liable to the Partnership or
the Limited Partners.  The Partnership shall not indemnify or hold
harmless the Indemnitee if the loss or liability was the result of negligence or
misconduct by the Indemnitee.  The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct set forth in this Section
6.3(a).  The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, does not alone determine that the Indemnitee acted in a
manner contrary to that specified in this Section 6.3(a).  Any
indemnification pursuant to this Section 6.3 shall be made only out of the
assets of the Partnership.

      


      (b)           Notwithstanding
anything to the contrary contained in the provisions of subsection (a) of this
Section, the Partnership shall not provide indemnification for any loss,
liability or expense arising from or out of an alleged violation of federal or
state securities laws by an Indemnitee unless one or more of the following
conditions are met:  (i) there has been a successful adjudication on
the merits of each count involving alleged securities law violations as to the
particular Indemnitee, (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular Indemnitee,
or (iii) a court of competent jurisdiction approves a settlement of the claims
against a particular Indemnitee and finds that indemnification of the settlement
and the related costs should be made, and the court considering the request for
indemnification has been advised of the position of the SEC and of the published
position of any state securities regulatory authority in which securities of the
Partnership were offered or sold as to indemnification for violations of
securities laws.

      


      (c)           The
Partnership shall pay or reimburse reasonable legal expenses and other costs
incurred by an Indemnitee in advance of final disposition of a proceeding if all
of the following are satisfied:  (i) the proceeding relates to acts or
omissions with respect to the performance of duties for services on behalf of
the Partnership, (ii) the Indemnitee provides the Partnership with written
affirmation of the Indemnitee’s good faith belief that the Indemnitee has met
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.3, (iii) the legal proceeding was initiated by a
third party who is not a stockholder of the General Partner or, if by a
stockholder of the General Partner acting in his or her capacity as such, a
court of competent jurisdiction approves such advancement, and (iv) the
Indemnitee provides the Partnership with a written agreement to repay the amount
paid or reimbursed by the Partnership, together with the applicable legal rate
of interest thereon, if it is ultimately determined that the Indemnitee did not
comply with the requisite standard of conduct and is not entitled to
indemnification.


      
        
           


        

        
          21

          
            

          

        

        
           


        

      


      (d)           The
Indemnification provided by this Section 6.3 shall be in addition to any other
rights to which an Indemnitee or any other Person may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.

      


      (e)           The
Partnership may purchase and maintain insurance or establish other arrangements,
including without limitation trust arrangements and letters of credit on behalf
of or to secure indemnification obligations owed to the Indemnitees and such
other Persons as the General Partner shall determine against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership’s activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.

      


      (f)          
 For purposes of this Section 6.3, (i) the Partnership shall be deemed to
have requested an Indemnitee to serve as a fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of its duties to the Partnership also
imposes duties on the Indemnitee, or otherwise involves services by the
Indemnitee to the plan or participants or beneficiaries of the plan; (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 6.3; and (iii) actions taken or omitted by the Indemnitee with respect
to an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.

      


      (g)           In
no event may an Indemnitee subject the Limited Partners to personal liability by
reason of the indemnification provisions set forth in this
Agreement.

      


      (h)           An
Indemnitee shall not be denied indemnification in whole or in part under this
Section 6.3 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.

      


      (i)           
The provisions of this Section 6.3 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create
any rights in or be for the benefit of any other Persons.

      


      6.4           Liability
of the General Partner.

      


      (a)           Notwithstanding
anything to the contrary set forth in this Agreement, the General Partner shall
not be liable for monetary damages to the Partnership or any Partners for losses
sustained or liabilities incurred as a result of errors in judgment or any act
or omission if the General Partner acted in good faith.  The General
Partner shall not be in breach of any duty that the General Partner may owe to
the Limited Partners or the Partnership or any other Persons under this
Agreement or of any duty stated or implied by law or equity, provided, the
General Partner, acting in good faith, abides by the terms of this
Agreement.  In addition, to the extent the General Partner or any
officer, director, employee, agent or stockholder of the General Partner
performs its duties in accordance with the standards provided by the Act, as it
may be amended from time to time, or under any successor statute thereto, such
Person or Persons shall have no liability by reason of being or having been the
General Partner, or by reason of being an officer, director, employee, agent or
stockholder of the General Partner.  To the maximum extent that the
Act and the general laws of the State of Delaware, in effect from time to time,
permit limitation of the liability of general partners of a limited partnership,
the General Partner and its officers, directors, employees, agents and
stockholders shall not be liable to the Partnership or to any Partner for money
damages except to the extent that (i) the General Partner or its officers,
directors, employees, agents or stockholders actually received an improper
benefit or profit in money, property or services, in which case the liability
shall not exceed the amount of the benefit or profit in money, property or
services actually received; or (ii) a judgment or other final adjudication
adverse to the General Partner or one or more of its officers, directors,
employees, agents or stockholders is entered in a proceeding based on a finding
in the proceeding that the action or failure to act of the General Partner or
one or more of its officers, directors, employees, agents or stockholders was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.  Neither the amendment nor
repeal of this Section 6.4(a), nor the adoption or amendment of any other
provision of this Agreement inconsistent with this Section 6.4(a), shall apply
to or affect in any respect the applicability of the preceding sentence with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption.  In the absence of any Delaware statute limiting
the liability of the General Partner or its directors or officers for money
damages in a suit by or on behalf of the Partnership or by any Partner, the
General Partner and the officers, directors, employees, agents and stockholders
of the General Partner shall not be liable to the Partnership or to any Partner
for money damages except to the extent that (i) the General Partner or one or
more of its officers, directors, employees, agents or stockholders actually
received an improper benefit or profit in money, property or services, in which
case the liability shall not exceed the amount of the benefit or profit in
money, property or services actually received; or (ii) a judgment or other final
adjudication adverse to the General Partner or one or more of its officers,
directors, employees, agents or stockholders is entered in a proceeding based on
a finding in the proceeding that the action of the General Partner or one or
more of its officers, directors, employees or stockholders action or failure to
act was the result of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding.


      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      (b)           The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, itself and its stockholders collectively, that the
General Partner is under no obligation to consider the separate interests of the
Limited Partners (including, without limitation, the tax consequences to Limited
Partners or the tax consequences of some, but not all, of the Limited Partners)
in deciding whether to cause the Partnership to take (or decline to take) any
actions.  In the event of a conflict between the interests of its
stockholders on the one hand and the Limited Partners on the other, the General
Partner shall endeavor in good faith to resolve the conflict in a manner not
adverse to either its stockholders or the Limited Partners; provided, however,
that for so long as the General Partner directly owns a controlling interest in
the Partnership, any such conflict that the General Partner, in its sole and
absolute discretion, determines cannot be resolved in a manner not adverse to
either its stockholders or the Limited Partners shall be resolved in favor of
its stockholders.  The General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith.

      


      (c)           Subject
to its obligations and duties as General Partner set forth in Section 6.1, the
General Partner may exercise any of the powers granted to it under this
Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents.  The General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.

      


      (d)           Notwithstanding
any other provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of the General Partner to
refrain from acting on behalf of the Partnership, undertaken in the good faith
belief that such action or omission is necessary or advisable in order to (i)
protect the ability of the General Partner to continue to qualify as a REIT or
(ii) prevent the General Partner from incurring any taxes under Section 857,
Section 4981, or any other provision of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited
Partners.

      


      (e)           Any
amendment, modification or repeal of this Section 6.4 or any provision shall be
prospective only and shall not in any way affect the limitations on the General
Partner’s liability to the Partnership and the Limited Partners under this
Section 6.4 as in effect immediately prior to such amendment, modification or
repeal with respect to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when claims relating to such
matters may arise or be asserted.


      
        
           


        

        
          23

          
            

          

        

        
           


        

      


      6.5           Reimbursement
of General Partner.

      


      (a)           Except
as provided in this Section 6.5 and elsewhere in this Agreement (including the
provisions of Articles V and VI regarding distributions, payments, and
allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

      


      (b)           The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute discretion, for all
REIT Expenses and Administrative Expenses.

      


      6.6           Outside
Activities.  Subject
to the Declaration of Trust and any agreements entered into by the General
Partner or its Affiliates with the Partnership or a Subsidiary, or any officer,
director, employee, agent, trustee, Affiliate or stockholder of the General
Partner, the General Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities substantially similar
or identical to those of the Partnership.  Neither the Partnership nor
any of the Limited Partners shall have any rights by virtue of this Agreement in
any such business ventures, interests or activities.  None of the
Limited Partners or any other Person shall have any rights by virtue of this
Agreement or the partnership relationship established hereby in any such
business ventures, interests or activities, and the General Partner shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures, interests and activities to the Partnership or any Limited
Partner, even if such opportunity is of a character which. if presented to the
Partnership or any Limited Partner, could be taken by such Person.

      


      6.7           Employment
or Retention of Affiliates.

      


      (a)           Any
Affiliate of the General Partner may be employed or retained by the Partnership
and may otherwise deal with the Partnership (whether as an advisor, buyer,
lessor, lessee, manager, property management agent, asset manager, furnisher of
goods or services, broker, agent, lender or otherwise) and may receive from the
Partnership any compensation, price, or other payment therefor which the General
Partner determines to be fair and reasonable.

      


      (b)           The
Partnership may lend or contribute to its Subsidiaries or other Persons in which
it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner.  The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other
Person.

      


      (c)           The
Partnership may transfer assets to joint ventures, limited liability companies,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems to be consistent with this Agreement and applicable
law.

      


      (d)           Except
as expressly permitted by this Agreement, neither the General Partner nor any of
its Affiliates shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except pursuant to
transactions that are on terms that are fair and reasonable to the
Partnership.

      


      6.8           Title to
Partnership Assets.  Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof; provided, that title to any or all of
the Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner.  The General Partner hereby
declares and warrants that any Partnership assets for which legal title is held
in the name of the General Partner or any nominee or Affiliate of the General
Partner shall be held by such Person for the use and benefit of the Partnership
in accordance with the provisions of this Agreement; provided, that the General
Partner shall use its best efforts to cause legal title to such assets to be
vested in the Partnership as soon as reasonably practicable.  All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.


      
        
           


        

        
          24

          
            

          

        

        
           


        

      


      6.9           Miscellaneous.  In
the event the General Partner redeems any REIT Shares, then the General Partner
shall cause the Partnership to purchase from the General Partner or the Original
Limited Partner a number of Partnership Units determined by, and based upon, the
application of the Conversion Factor on the same terms upon which the General
Partner redeemed such REIT Shares.  Moreover, if the General Partner
makes a cash tender offer or other offer to acquire REIT Shares, then the
General Partner shall cause the Partnership to make a corresponding offer to the
General Partner or the Original Limited Partner to acquire an equal number of
Partnership Units held by the General Partner.  In the event any REIT
Shares are redeemed by the General Partner pursuant to such offer, the
Partnership shall redeem an equivalent number of the General Partner’s or the
Original Limited Partner’s Partnership Units for an equivalent purchase price
based on the application of the Conversion Factor.

      


      ARTICLE
VII

      CHANGES
IN GENERAL PARTNER

      


      7.1           Transfer
of the General Partner’s Partnership Interest.

      


      (a)           The
General Partner shall not transfer all or any portion of its General Partnership
Interest or withdraw as General Partner except as provided in or in connection
with a transaction contemplated by Sections 7.1(c), 7.1(d) or
7.1(e).

      


      (b)           The
General Partner agrees that the Percentage Interest for it will at all times, be
in the aggregate, at least 0.1%.

      


      (c)           Except
as otherwise provided in Section 7.1(d) or (e), the General Partner shall not
engage in any merger, consolidation or other combination with or into another
Person or sale of all or substantially all of its assets (other than in
connection with a change in the General Partner’s state of incorporation or
organizational form), which, in any such case, results in a change of control of
the General Partner (a “Transaction”),
unless:

      


      (i)           
the consent of Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners is obtained; or

      


      (ii)           as
a result of such Transaction all Limited Partners are granted the right to
receive for each Partnership Unit an amount of cash, securities, or other
property equal to the product of the Conversion Factor and the greatest amount
of cash, securities or other property paid in the Transaction to a holder of one
REIT Share in consideration of the transfer of one REIT Share; provided, that
if, in connection with the Transaction, a purchase, tender or exchange offer
(“Offer”) shall have
been made to and accepted by the holders of more than 50% of the outstanding
REIT Shares, each holder of Partnership Units shall be given the option to
exchange its Partnership Units for the greatest amount of cash, securities, or
other property which a Limited Partner would have received had it (A) exercised
its Exchange Right and (B) sold, tendered or exchanged pursuant to the Offer the
REIT Shares received upon exercise of the Exchange Right immediately prior to
the expiration of the Offer; or


      
        
           


        

        
          25

          
            

          

        

        
           


        

      


      (iii)           the
General Partner is the surviving entity in the Transaction and either (A) the
holders of REIT Shares do not receive cash, securities, or other property in the
Transaction or (B) all Limited Partners (other than the General Partner or any
Subsidiary) receive an amount of cash, securities, or other property (expressed
as an amount per REIT Share) that is no less than the product of the Conversion
Factor and the greatest amount of cash, securities, or other property (expressed
as an amount per REIT Share) received in the Transaction by any holder of REIT
Shares.

      


      (d)           Notwithstanding
Section 7.1(c), the General Partner may merge with or into or consolidate with
another entity if immediately after such merger or consolidation (i)
substantially all of the assets of the successor or surviving entity (the “Survivor”), other than
Partnership Units held by the General Partner, are contributed, directly or
indirectly, to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value equal to the value of the assets so
contributed as determined by the Survivor in good faith and (ii) the Survivor
expressly agrees to assume all obligations of the General Partner, as
appropriate, hereunder.  Upon such contribution and assumption, the
Survivor shall have the right and duty to amend this Agreement as set forth in
this Section 7.1(d).  The Survivor shall in good faith arrive at a new
method for the calculation of the Cash Amount, the REIT Shares Amount and the
Conversion Factor for a Partnership Unit after any such merger or consolidation
so as to approximate the existing method for such calculation as closely as
reasonably possible.  Such calculation shall take into account, among
other things, the kind and amount of securities, cash and other property that
was receivable upon such merger or consolidation by a holder of REIT Shares or
options, warrants or other rights relating thereto, and which a holder of
Partnership Units could have acquired had such Partnership Units been exchanged
immediately prior to such merger or consolidation.  Such amendment to
this Agreement shall provide for adjustments to such method of calculation,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for herein with respect to the Conversion Factor.  The
Survivor also shall in good faith modify the definition of REIT Shares and make
such amendments to Section 8.5 so as to approximate the existing rights and
obligations set forth in Section 8.5 as closely as reasonably
possible.  The above provisions of this Section 7.1(d) shall similarly
apply to successive mergers or consolidations permitted hereunder.

      


      In
respect of any transaction described in the preceding paragraph, the General
Partner is required to use its commercially reasonable efforts to structure such
transaction to avoid causing the Limited Partners to recognize a gain for
federal income tax purposes by virtue of the occurrence of or their
participation in such transaction, provided, such efforts are consistent with
the exercise of the Board of Directors’ fiduciary duties to the stockholders of
the General Partner under applicable law.

      


      (e)           Notwithstanding
Section 7.1(c),

      


      (i)           a
General Partner may transfer all or any portion of its General Partnership
Interest to (A) a wholly-owned Subsidiary of such General Partner or (B) the
owner of all of the ownership interests of such General Partner, and following a
transfer of all of its General Partnership Interest, may withdraw as General
Partner; and

      


      (ii)           the
General Partner may engage in a transaction not required by law or by the rules
of any national securities exchange on which the REIT Shares are listed to be
submitted to the vote of the holders of the REIT Shares.


      
        
           


        

        
          26

          
            

          

        

        
           


        

      


      7.2           Admission
of a Substitute or Additional General Partner.  A
Person shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are
satisfied:

      


      (a)           the
Person to be admitted as a substitute or additional General Partner shall have
accepted and agreed to be bound by all the terms and provisions of this
Agreement by executing a counterpart and such other documents or instruments as
may be required or appropriate in order to effect the admission of such Person
as a General Partner, a certificate evidencing the admission of such Person as a
General Partner shall have been filed for recordation and all other actions
required by Section 2.5 in connection with such admission shall have been
performed;

      


      (b)           if
the Person to be admitted as a substitute or additional General Partner is a
corporation or a partnership, it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of such Person’s authority
to become a General Partner and to be bound by the terms and provisions of this
Agreement; and

      


      (c)           counsel
for the Partnership shall have rendered an opinion (relying on such opinions
from other counsel in the state or any other jurisdiction as may be necessary)
that the admission of the Person to be admitted as a substitute or additional
General Partner is in conformity with the Act, and that none of the actions
taken in connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be classified other
than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner’s limited liability.

      


      7.3           Effect of
Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.

      


      (a)           Upon
the occurrence of an Event of Bankruptcy as to a General Partner (and its
removal pursuant to Section 7.4(a)) or the death, withdrawal, removal or
dissolution of a General Partner (except that, if a General Partner is, on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners thereof), the
Partnership shall be dissolved and terminated unless the Partnership is
continued pursuant to Section 7.3(b).  The merger of the General
Partner with or into any entity that is admitted as a substitute or successor
General Partner pursuant to Section 7.2 shall not be deemed to be the
withdrawal, dissolution or removal of the General Partner.

      


      (b)           Following
the occurrence of an Event of Bankruptcy as to a General Partner (and its
removal pursuant to Section 7.4(a)) or the death, withdrawal, removal or
dissolution of a General Partner (except that, if a General Partner is, on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners thereof), the
Limited Partners, within 90 days after such occurrence, may elect to continue
the business of the Partnership for the balance of the term specified in Section
2.4 by selecting, subject to Section 7.2 and any other provisions of this
Agreement, a substitute General Partner by consent of a majority in interest of
the Limited Partners.  If the Limited Partners elect to continue the
business of the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.

      


      7.4           Removal
of a General Partner.

      


      (a)           Upon
the occurrence of an Event of Bankruptcy as to, or the dissolution of, a General
Partner, such General Partner shall be deemed to be removed automatically;
provided, however, that if a General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or
removal of a partner in such partnership shall be deemed not to be a dissolution
of the General Partner if the business of such General Partner is continued by
the remaining partner or partners thereof.  The Limited Partners may
not remove the General Partner, with or without cause.


      
        
           


        

        
          27

          
            

          

        

        
           


        

      


      (b)           If
a General Partner has been removed pursuant to this Section 7.4 and the
Partnership is continued pursuant to Section 7.3, such General Partner shall
promptly transfer and assign its General Partnership Interest to the substitute
General Partner approved by a majority in interest of the Limited Partners in
accordance with Section 7.3(b) and otherwise admitted to the Partnership in
accordance with Section 7.2.  At the time of assignment, the removed
General Partner shall be entitled to receive from the substitute General Partner
the fair market value of the General Partnership Interest of such removed
General Partner as reduced by any damages caused to the Partnership by such
General Partner’s removal.  Such fair market value shall be determined
by an appraiser mutually agreed upon by the General Partner and Limited Partners
holding more than 50% of the Percentage Interests of the Limited Partners within
10 days following the removal of the General Partner.  In the event
that the parties are unable to agree upon an appraiser, the removed General
Partner and Limited Partners holding more than 50% of the Percentage Interests
of the Limited Partners shall each select an appraiser.  Each such
appraiser shall complete an appraisal of the fair market value of the removed
General Partner’s General Partnership Interest within 30 days of the General
Partner’s removal, and the fair market value of the removed General Partner’s
General Partnership Interest shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than 40 days after the removal of the General Partner, shall select a third
appraiser who shall complete an appraisal of the fair market value of the
removed General Partner’s General Partnership Interest no later than 60 days
after the removal of the General Partner.  In such case, the fair
market value of the removed General Partner’s General Partnership Interest shall
be the average of the two appraisals closest in value.

      


      (c)           The
General Partnership Interest of a removed General Partner, during the time after
removal until the date of transfer under Section 7.4(b), shall be converted to
that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, Profit, gain or Loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners.  Instead, such
removed General Partner shall receive and be entitled only to retain
distributions or allocations of such items that it would have been entitled to
receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.4(b).

      


      (d)           All
Partners shall have given and hereby do give such consents, shall take such
actions and shall execute such documents as shall be legally necessary and
sufficient to effect all the foregoing provisions of this Section
7.4.

      


      ARTICLE
VIII

      RIGHTS
AND OBLIGATIONS

      OF
THE LIMITED PARTNERS

      


      8.1           Management
of the Partnership.  The
Limited Partners shall not participate in the management or control of
Partnership business nor shall they transact any business for or on behalf of
the Partnership, nor shall they have the power to sign for or bind the
Partnership, such powers being vested solely and exclusively in the General
Partner.

      


      8.2           Power of
Attorney.  Each
Limited Partner hereby irrevocably appoints the General Partner its true and
lawful attorney-in-fact, who may act for each Limited Partner and in its name,
place and stead, and for its use and benefit, sign, acknowledge, swear to,
deliver, file or record, at the appropriate public offices, any and all
documents, certificates, and instruments as may be deemed necessary or desirable
by the General Partner to carry out fully the provisions of this Agreement and
the Act in accordance with their terms, which power of attorney is coupled with
an interest and shall survive the death, dissolution or legal incapacity of the
Limited Partner, or the transfer by the Limited Partner of any part or all of
its Partnership Interest.


      
        
           


        

        
          28

          
            

          

        

        
           


        

      


      8.3           Limitation
on Liability of Limited Partners.  No
Limited Partner shall be liable for any debts, liabilities, contracts or
obligations of the Partnership.  A Limited Partner shall be liable to
the Partnership only to make payments of its Capital Contribution, if any, as
and when due hereunder.  After its Capital Contribution is fully paid,
no Limited Partner shall, except as otherwise required by the Act, be required
to make any further Capital Contributions or other payments or lend any funds to
the Partnership.

      


      8.4           Ownership
by Limited Partner of Corporate General Partner or Affiliate.  No
Limited Partner shall at any time, either directly or indirectly, own any stock
or other interest in the General Partner or in any Affiliate thereof, if such
ownership by itself or in conjunction with other stock or other interests owned
by other Limited Partners would, in the opinion of counsel for the Partnership,
jeopardize the classification of the Partnership as a partnership for federal
income tax purposes.  The General Partner shall be entitled to make
such reasonable inquiry of the Limited Partners as is required to establish
compliance by the Limited Partners with the provisions of this Section
8.4.

      


      8.5           Exchange
Right.

      


      (a)           Subject
to Sections 8.5(b), 8.5(c), 8.5(d) and 8.5(e), and subject to the potential
modification of any rights or obligations provided for herein by agreement(s)
between the Partnership and any one or more Limited Partners with respect to
Partnership Units held by them, each Limited Partner shall have the right (the
“Exchange Right”) to
require the Partnership to redeem on a Specified Exchange Date all or a portion
of the Partnership Units held by such Limited Partner at an exchange price equal
to and in the form of the Cash Amount to be paid by the Partnership; provided,
that such Partnership Units shall have been outstanding for at least one
year.  The Exchange Right shall be exercised pursuant to the delivery
of an Exchange Notice to the Partnership (with a copy to the General Partner) by
the Limited Partner who is exercising the Exchange Right (the “Exchanging Partner”);
provided, however, that the Partnership shall not be obligated to satisfy such
Exchange Right if the General Partner elects to purchase the Partnership Units
subject to the Exchange Notice pursuant to Section 8.5(b); and provided further,
that no Limited Partner may deliver more than two Exchange Notices during each
calendar year.  A Limited Partner may not exercise the Exchange Right
for less than 1,000 Partnership Units or, if such Limited Partner holds less
than 1,000 Partnership Units, all of the Partnership Units held by such
Partner.  The Exchanging Partner shall have no right, with respect to
any Partnership Units so exchanged, to receive any distribution paid with
respect to such Partnership Units if the record date for such distribution is on
or after the Specified Exchange Date.

      


      (b)           Notwithstanding
the provisions of Section 8.5(a), a Limited Partner that exercises the Exchange
Right shall be deemed to have also offered to sell the Partnership Units
described in the Exchange Notice to the General Partner, and the General Partner
may, in its sole and absolute discretion, elect to purchase directly and acquire
such Partnership Units by paying to the Exchanging Partner either the Cash
Amount or the REIT Shares Amount, as elected by the General Partner (in its sole
and absolute discretion), on the Specified Exchange Date, whereupon the General
Partner shall acquire the Partnership Units offered for exchange by the
Exchanging Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units.  If the General Partner shall
elect to exercise its right to purchase Partnership Units under this Section
8.5(b) with respect to an Exchange Notice, it shall so notify the Exchanging
Partner within five business days after the receipt by the General Partner of
such Exchange Notice.  Unless the General Partner (in its sole and
absolute discretion) shall exercise its right to purchase Partnership Units from
the Exchanging Partner pursuant to this Section 8.5(b), the General Partner
shall have no obligation to the Exchanging Partner or the Partnership with
respect to the Exchanging Partner’s exercise of an Exchange Right.  In
the event the General Partner shall exercise its right to purchase Partnership
Units with respect to the exercise of an Exchange Right in the manner described
in the first sentence of this Section 8.5(b), the Partnership shall have no
obligation to pay any amount to the Exchanging Partner with respect to such
Exchanging Partner’s exercise of such Exchange Right, and each of the Exchanging
Partner and the General Partner shall treat the transaction between the General
Partner and the Exchanging Partner for federal income tax purposes as a sale of
the Exchanging Partner’s Partnership Units to the General
Partner.  Each Exchanging Partner agrees to execute such documents as
the General Partner may reasonably require in connection with the issuance of
REIT Shares to such Exchanging Partner upon exercise of its Exchange
Right.


      
        
           


        

        
          29

          
            

          

        

        
           


        

      


      (c)           Notwithstanding
the provisions of Sections 8.5(a) and 8.5(b), a Limited Partner shall not be
entitled to exercise the Exchange Right if the delivery of REIT Shares to such
Partner on the Specified Exchange Date by the General Partner pursuant to
Section 8.5(b) (regardless of whether or not the General Partner would in fact
exercise its rights under Section 8.5(b)) would (i) result in such Partner or
any other person owning, directly or indirectly, REIT Shares in excess of the
ownership limitations described in the Declaration of Trust and calculated in
accordance therewith, (ii) result in REIT Shares being owned by fewer than 100
persons (determined without reference to any rules of attribution), except as
provided in the Declaration of Trust, (iii) result in the General Partner being
“closely held” within the meaning of Section 856(h) of the Code, (iv) cause the
General Partner to own, directly or constructively, 10% or more of the ownership
interests in a tenant of the General Partner’s, the Partnership’s, or a
Subsidiary Partnership’s real property within the meaning of Section
856(d)(2)(B) of the Code, or (v) cause the acquisition of REIT Shares by such
Partner to be “integrated” with any other distribution of REIT Shares for
purposes of complying with the registration provisions of the Securities
Act.  The General Partner, in its sole and absolute discretion, may
waive any of the restrictions on exchange set forth in this Section 8.5(c);
provided, however, that in the event any such restriction is waived, the
Exchanging Partner shall be paid the Cash Amount.

      


      (d)           Any
Cash Amount to be paid to an Exchanging Partner pursuant to this Section 8.5
shall be paid on the Specified Exchange Date; provided, however, that the
General Partner may elect to cause the Specified Exchange Date to be delayed for
up to 180 days to the extent required for the General Partner to cause
additional REIT Shares to be issued to provide financing to be used to make such
payment of the Cash Amount.  Notwithstanding the foregoing, the
General Partner agrees to use its best efforts to cause the closing of the
acquisition of exchanged Partnership Units hereunder to occur as quickly as
reasonably possible.

      


      (e)           Notwithstanding
any other provision of this Agreement, the General Partner shall place
appropriate restrictions on the ability of the Limited Partners to exercise
their Exchange Rights as and if deemed necessary to ensure that the Partnership
does not constitute a “publicly traded partnership” under Section 7704 of the
Code.  If and when the General Partner determines that imposing such
restrictions is necessary, the General Partner shall give prompt written notice
thereof (a “Restriction
Notice”) to each of the Limited Partners, which notice shall be
accompanied by a copy of an opinion of counsel to the Partnership which states
that, in the opinion of such counsel, restrictions are necessary in order to
avoid the Partnership being treated as a “publicly traded partnership” under
Section 7704 of the Code.

      


      8.6           Call
Right.

      


      (a)           Subject
to Section 8.6(c) below, and subject to the modification of any rights or
obligations provided for herein by agreement(s) between the General Partner and
any one or more Limited Partners with respect to the Partnership Units held by
them, at any time after the expiration of the Holding Period for the Partnership
Units in question, the General Partner shall have the right (the “Call Right”) to purchase all
of the Partnership Units held by a Limited Partner at a price equal to the Cash
Amount; provided, however, that the General Partner may, in its sole and
absolute discretion, elect to purchase such Partnership Units by paying to the
Partner in question the REIT Shares Amount in lieu of the Cash
Amount.  The Call Right shall be exercised pursuant to a notice (the
“Call Notice”) delivered
by the General Partner to any such Limited Partner.  The General
Partner may not exercise the Call Right for less than the entire interest of a
Limited Partner in the Partnership.  A Limited Partner receiving the
Call Notice described above shall have no rights with respect to any interest in
the Partnership other than the right to receive payment for its interest in the
Partnership in cash or REIT Shares in accordance with this Section
8.6.  An assignee of a Limited Partner shall be bound by and subject
to the Call Right of the General Partner pursuant to this Section
8.6.  In connection with any exercise of such Call Right by the
General Partner with respect to an assignee, the Cash Amount (or REIT Shares
Amount) shall be paid by the General Partner directly to such assignee and not
to the Limited Partner from which such assignee acquired its Partnership
Units.  The General Partner shall be unable to exercise the Call Right
and the Call Right shall lapse upon the occurrence of a Liquidating Event unless
and until the Partners shall continue the business of the Partnership under
Section 7.3.


      
        
           


        

        
          30

          
            

          

        

        
           


        

      


      (b)

      


      (i)           Within
30 days after the delivery of the Call Notice by the General Partner to a
Limited Partner under this Section 8.6, the General Partner (subject to the
limitations set forth in Section 8.6(c)) shall transfer and deliver the Cash
Amount (or the REIT Shares Amount) to such Limited Partner or, as applicable,
its assignee, whereupon the General Partner (or its designee) shall acquire the
Partnership Units of such Limited Partner or, as applicable, its assignee, and
shall be treated for all purposes of this Agreement as the owner of such
Partnership Units (and as a Limited Partner with respect to such Partnership
Units).

      


      (ii)           In
the event that the General Partner elects to pay such Limited Partner in the
form of the REIT Shares Amount and such REIT Shares Amount is not a whole number
of REIT Shares, the Limited Partner shall be paid (A) the number of REIT Shares
which equals the nearest whole number less than such amount plus (B) an amount
of cash which the General Partner determines, in its reasonable discretion, to
represent the fair value of the remaining fractional REIT Share which would
otherwise be payable to the Limited Partner.

      


      (iii)           Each
Limited Partner agrees to deliver to the General Partner the Partnership Unit
certificate(s) representing its Limited Partnership Interest and to execute such
documents as the General Partner may reasonably require in connection with the
issuance of REIT Shares upon exercise of the Call Right (including without
limitation an assignment of Partnership Units pursuant to the terms of which
such Limited Partner (A) represents, warrants and certifies that it has
marketable and unencumbered title to its Partnership Units, free and clear of
the rights of or interest of any other person or entity, that it has the full
right, power and authority to transfer and surrender its Partnership Units, and
that it has obtained the consent or approval of all persons or entities, if any,
having the right to consent to or approve of such transfer and surrender, and
(B) agrees to indemnify and hold the General Partner harmless from and against
any and all liabilities, charges, costs and expenses relating to such Limited
Partner’s Partnership Units which are subject to the Call Right or the exercise
of the Call Right).

      


      (c)           Notwithstanding
the provisions of Sections 8.6(a) and 8.6(b) above, the General Partner shall
not be entitled to exercise the Call Right if (i) a Liquidating Event has
occurred with regard to the Partnership and the Partnership has not been
continued under Section 7.3; or (ii) the delivery of REIT Shares to the Limited
Partner (A) would be prohibited under the Declaration of Trust, (B) would
adversely affect the ability of the General Partner to continue to qualify as a
REIT or subject the General Partner to any additional taxes under Section 857 or
Section 4981 of the Code, or (C) would be prohibited under applicable federal or
state securities laws or regulations.

      


      (d)           Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered in connection with the Call Right shall be delivered
to the General Partner free and clear of all liens and encumbrances and,
notwithstanding anything contained herein to the contrary, the General Partner
shall not be under any obligation to acquire a Limited Partner’s Partnership
Units (i) to the extent that any such Partnership Units are subject to any such
liens or encumbrances or (ii) in the event that the Limited Partner shall fail
to give the General Partner adequate assurances that such Partnership Units are
not subject to any such liens or encumbrances or shall fail to agree to fully
indemnify the General Partner from any such liens or encumbrances as well as the
liabilities, charges, costs and expenses referenced in the last section of
Section 8.6(b)(iii).  Each Limited Partner further agrees that, in the
event any state or local transfer tax is payable as a result of the transfer of
its Partnership Units to the General Partner, such Limited Partner shall assume
and pay such transfer tax.


      
        
           


        

        
          31

          
            

          

        

        
           


        

      


      8.7           Duties
and Conflicts.  The
General Partner recognizes that the Limited Partners and their Affiliates have
or may have other business interests, activities and investments, some of which
may be in conflict or competition with the business of the Partnership, and that
such Persons are entitled to carry on such other business interests, activities
and investments.  The Limited Partners and their Affiliates may engage
in or possess an interest in any other business or venture of any kind,
independently or with others, on their own behalf or on behalf of other entities
with which they are affiliated or associated, and such Persons may engage in any
activities, whether or not competitive with the Partnership, without any
obligation to offer any interest in such activities to the Partnership or to any
Partner.  Neither the Partnership nor any Partner shall have any
right, by virtue of this Agreement, in or to such activities, or the income or
profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, and such activities shall not
be deemed wrongful or improper.

      


      ARTICLE
IX

      TRANSFERS
OF LIMITED PARTNERSHIP INTERESTS

      


      9.1           Purchase
for Investment.

      


      (a)           Each
Limited Partner hereby represents and warrants to the General Partner and to the
Partnership that the acquisition of its Partnership Interest is made as a
principal for its account for investment purposes only and not with a view to
the resale or distribution of such Partnership Interest.

      


      (b)           Each
Limited Partner agrees that it will not sell, assign or otherwise transfer its
Partnership Interest or any fraction thereof, whether voluntarily or by
operation of law or at judicial sale or otherwise, to any Person who does not
make the representations and warranties to the General Partner set forth in
Section 9.1(a) above.

      


      9.2           Restrictions
on Transfer of Limited Partnership Interests.

      


      (a)           Subject
to the provisions of Sections 9.2(b), 9.2(c) and 9.2(d), no Limited Partner may
offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of its Limited Partnership Interest, or any of such Limited Partner’s
economic rights as a Limited Partner, whether voluntarily or by operation of law
or at judicial sale or otherwise (collectively, a “Transfer”), without the
consent of the General Partner, which consent may be granted or withheld in its
sole and absolute discretion.  Any such purported transfer undertaken
without such consent shall be considered to be null and void ab initio and shall
not be given effect.  The Original Limited Partner acknowledges that
the General Partner has agreed not to grant its consent with respect to any
Transfer by the Original Limited Partner prior to the Transfer Restriction Date;
provided, that the Original Limited Partner shall not be prohibited from a
Transfer of its Partnership Interest pursuant to the exercise of its right to
exchange its Partnership Interest for REIT Shares pursuant to Section 8.5 above,
in which case the Original Limited Partner acknowledges that the General Partner
has also agreed not to grant its consent with respect to any Transfer of said
REIT Shares prior to the Transfer Restriction Date.  The General
Partner may require, as a condition of any Transfer to which it consents, that
the transferor assume all costs incurred by the Partnership in connection
therewith.


      
        
           


        

        
          32

          
            

          

        

        
           


        

      


      (b)           No
Limited Partner may withdraw from the Partnership other than as a result of: (i)
a permitted Transfer (i.e., a Transfer consented to as contemplated by paragraph
(a) above or paragraph (c) below or a Transfer made pursuant to Section 9.5
below) of all of its Partnership Units pursuant to this Article IX pursuant to
an exchange of all of its Partnership Units pursuant to Section 8.5 above; or
(iii) a Transfer made pursuant to the sale of all its Partnership Units pursuant
to Section 8.6 above.  Upon the permitted Transfer or redemption of
all of a Limited Partner’s Partnership Units, such Limited Partner shall cease
to be a Limited Partner.

      


      (c)           Subject
to Sections 9.2(d), 9.2(e) and 9.2(f), a Limited Partner may Transfer, with the
consent of the General Partner, all or a portion of its Partnership Units to (i)
a parent or parent’s spouse, natural or adopted descendants, a spouse of any
such descendant, a brother or sister, or a trust created by such Limited Partner
for the benefit of such Limited Partner and/or any such person(s), for which
trust such Limited Partner or any such person(s) is a trustee, (ii) a
corporation controlled by a Person or Persons named in (i) above, or (iii) if
the Limited Partner is an entity, its beneficial owners.

      


      (d)           No
Limited Partner may effect a Transfer of its Limited Partnership Interest, in
whole or in part, if, in the opinion of legal counsel for the Partnership, such
proposed Transfer would require the registration of the Limited Partnership
Interest under the Securities Act, or would otherwise violate any applicable
federal or state securities or blue sky law (including investment suitability
standards).

      


      (e)           No
Transfer by a Limited Partner of its Partnership Units, in whole or in part, may
be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the transfer would result in the Partnership’s being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner to continue to qualify as a REIT or subject the General Partner
to any additional taxes under Section 857 or Section 4981 of the Code, or (iii)
such transfer is effectuated through an “established securities market” or a
“secondary market” (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code.

      


      (f)           No
transfer of any Partnership Units may be made to a lender to the Partnership or
any Person who is related (within the meaning of Regulations Section 1.752-4(b))
to any lender to the Partnership whose loan constitutes a nonrecourse liability
(within the meaning of Regulations Section 1.752-1(a)(2)), without the consent
of the General Partner, which may be withheld in its sole and absolute
discretion; provided, that as a condition to such consent the lender will be
required to enter into an arrangement with the Partnership and the General
Partner to exchange or redeem for the Cash Amount any Partnership Units in which
a security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.

      


      (g)           Any
Transfer in contravention of any of the provisions of this Article IX shall be
void and ineffectual and shall not be binding upon, or recognized by, the
Partnership.

      


      (h)           Prior
to the consummation of any Transfer under this Article IX, the transferor and/or
the transferee shall deliver to the General Partner such opinions, certificates
and other documents as the General Partner shall request in connection with such
Transfer.


      
        
           


        

        
          33

          
            

          

        

        
           


        

      


      9.3           Admission
of Substitute Limited Partner.

      


      (a)           Subject
to the other provisions of this Article IX, an assignee of a Limited Partnership
Interest (which shall be understood to include any purchaser, transferee, donee
or other recipient of any disposition of such Limited Partnership Interest)
shall be deemed admitted as a Limited Partner only with the consent of the
General Partner and upon the satisfactory completion of the
following:

      


      (i)           the
assignee shall have accepted and agreed to be bound by the terms and provisions
of this Agreement by executing a counterpart or an amendment thereof, including
a revised Exhibit
A, and such other documents or instruments as the General Partner may
require in order to effect the admission of such Person as a Limited
Partner;

      


      (ii)           to
the extent required, an amended Certificate evidencing the admission of such
Person as a Limited Partner shall have been signed, acknowledged and filed for
record in accordance with the Act;

      


      (iii)           the
assignee shall have delivered a letter containing the representation set forth
in Section 9.1(a) and the agreement set forth in Section 9.1(b);

      


      (iv)           if
the assignee is a corporation, partnership or trust, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the
Partnership of the assignee’s authority to become a Limited Partner under the
terms and provisions of this Agreement;

      


      (v)           the
assignee shall have executed a power of attorney containing the terms and
provisions set forth in Section 8.2;

      


      (vi)           the
assignee shall have paid all legal fees and other expenses of the Partnership
and the General Partner and filing and publication costs in connection with its
substitution as a Limited Partner; and

      


      (vii)           the
assignee shall have obtained the prior written consent of the General Partner to
its admission as a Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner’s sole and absolute
discretion.

      


      (b)           For
the purpose of allocating Profit and Loss and distributing cash received by the
Partnership, a Substitute Limited Partner shall be treated as having become, and
appearing in the records of the Partnership as, a Partner upon the filing of the
Certificate described in Section 9.3(a)(ii) or, if no such filing is required,
the later of the date specified in the transfer documents or the date on which
the General Partner has received all necessary instruments of transfer and
substitution.

      


      (c)           The
General Partner shall cooperate with the Person seeking to become a Substitute
Limited Partner by preparing the documentation required by this Section 9.3 and
making all official filings and publications.  The Partnership shall
take all such action as promptly as practicable after the satisfaction of the
conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.

      


      9.4           Rights of
Assignees of Partnership Interests.

      


      (a)           Subject
to the provisions of Sections 9.1 and 9.2, except as required by operation of
law, the Partnership shall not be obligated for any purposes whatsoever to
recognize the assignment by any Limited Partner of its Partnership Interest
until the Partnership has received notice thereof.


      
        
           


        

        
          34

          
            

          

        

        
           


        

      


      (b)           Any
Person who is the assignee of all or any portion of a Limited Partner’s Limited
Partnership Interest, but who does not become a Substitute Limited Partner and
desires to make a further assignment of such Limited Partnership Interest, shall
be subject to all the provisions of this Article IX to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of its
Limited Partnership Interest.

      


      9.5           Effect of Bankruptcy, Death, Incompetence or
Termination of aLimited Partner. 

      


      The
occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a
Limited Partner or a final adjudication that a Limited Partner is incompetent
(which term shall include, but not be limited to, insanity) shall not cause the
termination or dissolution of the Partnership, and the business of the
Partnership shall continue if an order for relief in a bankruptcy proceeding is
entered against a Limited Partner, the trustee or receiver of his estate or, if
he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, and any such
Person shall have the rights of such Limited Partner for the purpose of settling
or managing his estate property and such power as the bankrupt, deceased or
incompetent Limited Partner possessed to assign all or any part of his
Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited
Partner.

      


      9.6           Joint
Ownership of Interests.  A
Partnership Interest may be acquired by two individuals as joint tenants with
right of survivorship, provided, that such individuals either are married or are
related and share the same personal residence.  The written consent or
vote of both owners of any such jointly-held Partnership Interest shall be
required to constitute the action of the owners of such Partnership Interest;
provided, however, that the written consent of only one joint owner will be
required if the Partnership has been provided with evidence satisfactory to the
counsel for the Partnership that the actions of a single joint owner can bind
both owners under the applicable laws of the state of residence of such joint
owners.  Upon the death of one owner of a Partnership Interest held in
a joint tenancy with a right of survivorship, the Partnership Interest shall
become owned solely by the survivor as a Limited Partner and not as an
assignee.  The Partnership need not recognize the death of one of the
owners of a jointly held Partnership Interest until it shall have received
notice of such death.  Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former joint owners.

      


      ARTICLE
X

      BOOKS
AND RECORDS; ACCOUNTING; TAX MATTERS

      


      10.1         Books and
Records.  At
all times during the continuance of the Partnership, the Partners shall keep or
cause to be kept at the Partnership’s specified office true and complete books
of account maintained in accordance with generally accepted accounting
principles, including (a) a current list of the full name and last-known
business address of each Partner; (b) a copy of the Certificate and all
certificates of amendment thereto; (c) copies of the Partnership’s federal,
state and local income tax returns and reports; (d) copies of the Agreement and
any financial statements of the Partnership for the three most recent years; and
(e) all documents and information required under the Act.  Any Partner
or its duly authorized representative, and any stockholder of the General
Partner, upon paying the costs of collection, duplication and mailing, shall be
entitled to inspect or copy such records during ordinary business
hours.

      


      10.2         Custody
of Partnership Funds; Bank Accounts.

      


      (a)           All
funds of the Partnership not otherwise invested shall be deposited in one or
more accounts maintained in such banking or brokerage institutions as the
General Partner shall determine, and withdrawals shall be made only on such
signature or signatures as the General Partner may, from time to time,
determine.


      
        
           


        

        
          35

          
            

          

        

        
           


        

      


      (b)           All
deposits and other funds not needed in the operation of the business of the
Partnership may be invested by the General Partner in investment grade
instruments (or investment companies whose portfolio consists primarily thereof,
government obligations, certificates of deposit, bankers’ acceptances and
municipal notes and bonds.  The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.2(b).

      


      10.3         Fiscal
and Taxable Year.  The
fiscal and taxable year of the Partnership shall be the calendar
year.

      


      10.4         Annual
Tax Information and Report.  The
General Partner will use its best efforts to supply within 75 days after the end
of each fiscal year of the Partnership to each person who was a Limited Partner
at any time during such year the tax information necessary to file such Limited
Partner’s individual tax returns as shall be reasonably required by law, and in
all events the General Partner shall furnish such information within the time
required by applicable law.

      


      10.5         Tax
Matters Partner; Tax Elections; Special Basis Adjustments.

      


      (a)           The
General Partner shall be the Tax Matters Partner of the Partnership within the
meaning of Section 6231(a)(7) of the Code.  As Tax Matters Partner,
the General Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters
Partner.  The General Partner shall have the right to retain
professional assistance in respect of any audit of the Partnership by the
Service and all out-of-pocket expenses and fees incurred by the General Partner
on behalf of the Partnership as Tax Matters Partner shall constitute Partnership
expenses.  In the event the General Partner receives notice of a final
Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner
shall either (i) file a court petition for judicial review of such final
adjustment within the period provided under Section 6226(a) of the Code, a copy
of which petition shall be mailed to all Limited Partners on the date such
petition is filed, or (ii) mail a written notice to all Limited Partners, within
such period, that describes the General Partner’s reasons for determining not to
file such a petition.

      


      (b)           All
elections required or permitted to be made by the Partnership under the Code or
any applicable state or local tax law shall be made by the General Partner in
its sole and absolute discretion.

      


      (c)           In
the event of a transfer of all or any part of the Partnership Interest of any
Partner, the Partnership, at the option and in the sole and absolute discretion
of the General Partner, may elect pursuant to Section 754 of the Code to adjust
the basis of the Properties.  Notwithstanding anything contained in
Article V of this Agreement, any adjustments made pursuant to Section 754 shall
affect only the successor-in-interest to the transferring Partner and in no
event shall be taken into account in establishing, maintaining or computing
Capital Accounts for the other Partners for any purpose under this
Agreement.  Each Partner will furnish the Partnership with all
information necessary to give effect to such election.

      


      10.6         Reports
to Limited Partners.

      


      (a)           As
soon as practicable after the close of each fiscal quarter (other than the last
quarter of the fiscal year), the General Partner shall cause to be mailed to
each Limited Partner a quarterly report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, for such fiscal quarter presented
in accordance with generally accepted accounting principles.  As soon
as practicable after the close of each fiscal year, the General Partner shall
cause to be mailed to each Limited Partner an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
fiscal year, presented in accordance with generally accepted accounting
principles.  The annual financial statements shall be audited by
accountants selected by the General Partner.


      
        
           


        

        
          36

          
            

          

        

        
           


        

      


      (b)           Any
Partner shall further have the right to a private audit of the books and records
of the Partnership, provided such audit is made for Partnership purposes and at
the expense of the Partner desiring it, and it is made during normal business
hours.

      


      ARTICLE
XI

      AMENDMENT
OF AGREEMENT; MEETINGS

      


      11.1         Amendment.  The
General Partner’s consent shall be required for any amendment to this
Agreement.  The General Partner, without the consent of the Limited
Partners, may amend this Agreement in any respect; provided, however, that the
following amendments shall require the consent of Limited Partners holding more
than 50% of the Percentage Interests of the Limited Partners:

      


      (a)           any
amendment affecting the operation of the Conversion Factor or the Exchange Right
(except as provided in Sections 8.5(d) or 7.1(d)) in a manner adverse to the
Limited Partners;

      


      (b)           any
amendment that would adversely affect the rights of the Limited Partners to
receive the distributions payable to them hereunder, other than with respect to
the issuance of additional Partnership Units pursuant to Section
4.2;

      


      (c)           any
amendment that would alter the Partnership’s allocations of Profit and Loss to
the Limited Partners, other than with respect to the issuance of additional
Partnership Units pursuant to Section 4.2; or

      


      (d)           any
amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership.

      


      The
foregoing notwithstanding, the approval of any amendment to this Agreement that
shall be part of a plan of merger, plan of exchange or plan of conversion
involving the Partnership or the Partnership Interests shall be governed by
Article XII.  Notwithstanding anything to the contrary contained in
this Agreement, the Partners acknowledge that this Agreement shall be deemed to
be automatically amended and the General Partner is authorized to amend this
Agreement to the extent provided in Section 4.1 hereof.

      


      11.2         Meetings
of Partners.

      


      (a)           The
Partners may but shall not be required to hold any annual, periodic or other
formal meetings.  Meetings of the Partners may be called by the
General Partner or by any Limited Partner or Limited Partners holding at least
10% of the Partnership Units in the Partnership.

      


      (b)           The
Partner or Partners calling the meeting may designate any place within the State
of Delaware as the place of meeting for any meeting of the Partners; and
Partners holding at least a majority of the Partnership Units in the Partnership
may designate any place outside the State of Delaware as the place of meeting
for any meeting of the Partners.  If no designation is made, or if a
special meeting is called, the place of meeting shall be the principal place of
business of the Partnership.

      


      (c)           Except
as provided in Section 11.2(d), written notice stating the place, day and hour
of the meeting and the purpose or purposes for which the meeting is called shall
be delivered not less than ten (10) nor more than ninety (90) days before the
date of the meeting, either personally or by mail, by or at the direction of the
Partner or Partners calling the meeting, to each Partner entitled to vote at
such meeting and to each Partner not entitled to vote who is entitled to notice
of the meeting.


      
        
           


        

        
          37

          
            

          

        

        
           


        

      


      (d)           Anything
in this Agreement to the contrary notwithstanding, with respect to any meeting
of the Partners, any Partner who in person or by proxy shall have waived in
writing notice of the meeting, either before or after such meeting, or who shall
attend the meeting in person or by proxy, shall be deemed to have waived notice
of such meeting unless such Partner attends for the express purpose of
objecting, at the beginning of the meeting, and does so object to the
transaction of any business because the meeting is not lawfully called or
convened.

      


      (e)           If
all of the Partners shall meet at any time and place, either within or outside
of the State of Delaware, in person or by proxy, and consent to the holding of a
meeting at such time and place, such meeting shall be valid without call or
notice, and at such meeting lawful action may be taken.

      


      (f)           For
the purpose of determining Partners entitled to notice of or to vote at any
meeting of Partners or any adjournment thereof, the date on which notice of the
meeting is mailed shall be the record date. When a determination of Partners
entitled to vote at any meeting of Partners has been made as provided in this
Section, such determination shall apply to any adjournment thereof.

      


      (g)           Partners
holding at least a majority of the Partnership Units entitled to vote at a
meeting, represented in person or by proxy, shall constitute a quorum at any
meeting of Partners. In the absence of a quorum at any such meeting, Partners
holding at least a majority of Partnership Units so represented may adjourn the
meeting to another time and place.  Any business that might have been
transacted at the original meeting may be transacted at any adjourned meeting at
which a quorum is present.  No notice of an adjourned meeting need be
given if the time and place are announced at the meeting at which the
adjournment is taken unless the adjournment is for more than 120
days.  The Partners present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during
such meeting of that number Partnership Units whose absence would cause less
than a quorum to be present.

      


      (h)           If
a quorum is present, the affirmative vote of Partners holding a majority of the
Partnership Units entitled to vote, present in person or represented by proxy,
shall be binding on all Partners, unless the vote of a greater or lesser
proportion or number of Partnership Units or Partners is otherwise required by
applicable law or by this Agreement.  Unless otherwise expressly
provided herein or required under applicable law, Partners who have an interest
(economic or otherwise) in the outcome of any particular matter upon which the
Partners' vote or consent is required may vote or consent upon any such matter
and their Partnership Units, vote or consent, as the case may be, shall be
counted in the determination of whether the requisite matter was approved by the
Partners.

      


      (i)           At
all meetings of Partners, a Partner may vote in person or by proxy executed in
writing by the Partner or by the Partner's duly authorized attorney-in-fact.
Such proxy shall be filed with the General Partner before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.

      


      (j)           Action
required or permitted to be taken at a meeting of Partners may be taken without
a meeting if the action is evidenced by one or more written consents or
approvals describing the action taken and signed by sufficient Partners or
Partners holding sufficient Partnership Units, as the case may be, to approve
such action had such action been properly voted on at a duly called meeting of
the Partners.  Action taken under this Section 11.2(j) is effective
when the requisite Partners or Partners with the requisite Partnership Units, as
the case may be, have signed the consent or approval, unless the consent
specifies a different effective date.


      
        
           


        

        
          38

          
            

          

        

        
           


        

      


      ARTICLE
XII

      ARTICLE XXVIMERGER,
EXCHANGE OR CONVERSION

      


      12.1         Merger,
Exchange or Conversion of Partnership.

      


      (a)           The
Partnership may (i) adopt a plan of merger and may merge with or into one or
more domestic or foreign limited partnerships or other entities with the
resulting entity being one or more surviving entities, (ii) adopt a plan of
exchange by which a domestic or foreign limited partnership or other entity is
to acquire all of the outstanding Partnership Interests in exchange for cash,
securities or other property of the acquiring domestic or foreign limited
partnership or other entity or (iii) adopt a plan of conversion and convert to a
foreign limited partnership or other entity.  Any such plan of merger,
plan of exchange, or plan of conversion shall otherwise comply with the
requirements of this Agreement and the Act.

      


      (b)           Any
merger pursuant to a plan of merger described in Section 12.1(a)(i) shall be
conditioned upon the merger being permitted by the laws under which each other
entity that is a party to the merger is incorporated or organized or by the
constituent documents of such other entity that are not inconsistent with such
laws.  Any exchange pursuant to a plan of exchange described in
Section 12.1(a)(ii) shall be conditioned upon the issuance of shares or other
interests of the acquiring foreign limited partnership or other entity being
permitted by the laws under which such foreign limited partnership or other
entity is incorporated or organized or is not inconsistent with such
laws.  Any conversion pursuant to a plan of conversion described in
Section 12.1(a)(iii) shall be conditioned upon such conversion being permitted
by, or not inconsistent with, the laws of the jurisdiction in which the
converted entity is to be incorporated, formed or organized and the
incorporation, formation or organization of the converted entity is effected in
compliance with such laws.

      


      (c)           The
Partnership may adopt a plan of merger, plan of exchange or plan of conversion
if the General Partner acts upon and the Limited Partners (if required by
Section 12.2 below) approve the plan of merger, plan of exchange or plan of
conversion in the manner prescribed in Section 12.2 below.

      


      12.2         Approval
of Plan of Merger, Exchange or Conversion.

      


      (a)           Except
as provided by Section 12.2(g) below, after acting on a plan of merger, plan of
exchange or plan of conversion in the manner prescribed by Section 12.2(b)(i),
the General Partner shall submit the plan of merger, plan of exchange or plan of
conversion for approval by the Limited Partners.

      


      (b)           Except
as provided by Section 12.2(f) below, for a plan of merger, plan of exchange or
plan of conversion to be approved:

      


      (i)           the
General Partner shall adopt a resolution recommending that the plan of merger,
plan of exchange or plan of conversion be approved by the Limited Partners,
unless the General Partner determines that for any reason it should not make
that recommendation, in which case the General Partner shall adopt a resolution
directing that the plan of merger, plan of exchange or plan of conversion be
submitted to the Limited Partners for approval without recommendation;
and

      


      (ii)           the
Limited Partners entitled to vote on the plan of merger, plan of exchange or
plan of conversion must approve the plan as set forth in Section
12.2(e).

      


      (c)           The
General Partner may condition its submission to the Limited Partners of a plan
of merger, plan of exchange or plan of conversion, and the effectiveness of such
plan, on any basis, including without limitation that a specified percentage of
the Percentage Interests of the Limited Partners in excess of a majority of the
Percentage Interests of the Limited Partners be required for the approval of the
plan of merger, plan of exchange or plan of conversion.


      
        
           


        

        
          39

          
            

          

        

        
           


        

      


      (d)           The
General Partner shall notify each Limited Partner, whether or not entitled to
vote, of the meeting of the Limited Partners at which the plan of merger, plan
of exchange or plan of conversion is to be submitted for approval in accordance
with this Section 12.2 and applicable law.  The notice shall be given
at least twenty (20) days before the meeting and shall state that the purpose,
or one of the purposes, of the meeting is to consider the plan of merger, plan
of exchange or plan of conversion and shall contain or be accompanied by a copy
or summary of the plan.  Any such approval may be by written consent
of the requisite Limited Partners as would be required to approve the plan at
any meeting where all the Limited Partners are present.

      


      (e)           Unless
the General Partner (acting pursuant to Section 12.2(c)) requires a greater
vote, the vote of the Limited Partners required for approval of a plan of
merger, plan of exchange or plan of conversion shall be the affirmative vote of
the holders of more than 50% of the Percentage Interests of the Limited Partners
entitled to vote thereon.

      


      (f)           Unless
applicable law otherwise requires (in which case the approval of the Limited
Partners shall continue to be required and the foregoing provisions of this
Section 12.2 shall continue to apply), (1) approval by the Limited Partners on a
plan of exchange shall not be required, and the foregoing provisions of this
Section 12.2 do not apply, if the Partnership is the acquiring entity in the
plan of exchange, and (2) approval by the Limited Partners on a plan of merger
or a plan of conversion shall not be required and the foregoing provisions of
this Section 12.2 do not apply, if:

      


      (i)            
a limited partnership is the sole surviving or resulting entity;

      


      (ii)           
the partnership agreement of the surviving or resulting limited partnership will
not materially differ from this Agreement before the merger or conversion in any
manner other than as to applicable law or other insignificant conforming
differences;

      


      (iii)           Limited
Partners who held Limited Partnership Interests immediately before the effective
date of the merger or conversion will hold interests in the surviving or
resulting entity in the same proportions, immediately after the effective date
of the merger or conversion; and

      


      (iv)           the
General Partner adopts a resolution approving the plan of merger or plan of
conversion.

      


      (g)           After
a plan of merger, plan of exchange or plan of conversion is approved, and at any
time before the merger, exchange or conversion has become effective, the plan of
merger, plan of exchange or plan of conversion may be abandoned (subject to any
contractual rights by any of the entities that are a party thereto), without
action by the Limited Partners, in accordance with the procedures set forth in
the plan of merger, plan of exchange or plan of conversion or, if no such
procedures are set forth in the plan, in the manner determined by the General
Partner.

      


      12.3         Rights of
Dissenting Limited Partners.

      


      (a)           In
the absence of fraud in the transaction, the remedy provided by this Section
12.3 to a Limited Partner voting against any merger, exchange or conversion or
objecting to a merger, exchange or conversion approved by the written consent of
Limited Partners (a “Dissenting
Limited Partner”) is the exclusive remedy for the recovery of the value
of his Limited Partnership interests or money damages with respect to the
transaction.  If the existing, surviving, or new corporation or
limited partnership (foreign or domestic) or other entity, as the case may be,
complies with the requirements of this Section 12.3, any Dissenting Limited
Partner who fails to comply with the requirements of this Section 12.3 shall not
be entitled to bring suit for the recovery of the value of his Limited
Partnership interests or money damages with respect to the
transaction.  A “Dissenting Limited Partner” in respect of any merger,
exchange or conversion shall expressly exclude any Limited Partner who votes in
favor of the related plan of merger, plan of exchange or plan of conversion or
who abstains or fails to timely vote therefor.  In the event of a plan
of merger, plan of exchange or plan of conversion approved by written consent, a
“Dissenting Limited Partner” in respect of any related merger, exchange or
conversion shall expressly exclude Limited Partners who provide such written
consent and Limited Partners who fail to object to the merger, exchange or
conversion and demands payment for such Limited Partner’s Limited Partnership
Interest in writing to the General Partner within twenty (20) days after notice
to the Limited Partners of the receipt by the Partnership of written consents
sufficient to approve such merger, exchange or conversion.  All such
Limited Partners who are not included within the definition of Dissenting
Limited Partner in respect of any merger, exchange or conversion shall
participate in the merger, exchange or conversion according to the approved plan
of merger, plan of exchange or plan of conversion.


      
        
           


        

        
          40

          
            

          

        

        
           


        

      


      (b)           Any
Dissenting Limited Partner who has opted for payment for his Limited Partnership
interests shall not thereafter be entitled to vote or exercise any other rights
of a Limited Partner except the right to receive payment for his Limited
Partnership interests and the right to maintain an appropriate action to obtain
relief on the ground that the transaction would be or was
fraudulent.  Limited Partnership Interests of Dissenting Limited
Partners for which payment has been made shall not thereafter be considered
outstanding for the purposes of any subsequent vote of the Limited
Partners.

      


      (c)           Within
twenty (20) days after a Dissenting Limited Partner votes against any plan of
merger, plan of exchange or plan of conversion which is approved by a vote of
the Limited Partners, or in connection with a Limited Partner’s objection to any
plan of merger, plan of exchange or plan of conversion approved by the written
consent of the Limited Partners, the Dissenting Limited Partner may demand by
written notice to the General Partner that payment for his Limited Partnership
Interest be made.  Upon receipt of such a payment demand, the General
Partner shall (i) make a notation on the records of the Partnership that such
demand has been made and (ii) within a reasonable period of time after the later
of the receipt of a payment demand or the consummation of the merger, exchange
or conversion, cause the Partnership to pay to the Dissenting Limited Partner
the fair value of such Dissenting Limited Partner’s Partnership Interest without
interest.  The fair value of a Dissenting Limited Partner’s
Partnership Interest shall be an amount equal to the Dissenting Limited
Partner’s pro rata share (as would be determined under Section 5.6 if the
Partnership were liquidating) of the appraised value of the net assets of the
Partnership based on an appraisal of all assets of the Partnership from a
Competent Independent Expert.  The assets of the Partnership shall be
appraised on a consistent basis.  The appraisal shall be based on an
evaluation of all relevant information and shall include the current value of
the Partnership’s assets as of the date immediately prior to the proposed
merger, exchange or conversion.  The appraisal shall assume an orderly
liquidation of the Partnership’s assets over a twelve (12) month period, shall
consider other balance sheet items, and shall be net of the assumed cost of
sale.  The terms of the engagement of the appraiser shall clearly
state that the engagement is for the benefit of the Partnership and its Limited
Partners.  A summary of the independent appraisal, including all
material assumptions underlying the appraisal, shall be provided to Dissenting
Limited Partners in connection with the payment of the fair value of their
Limited Partnership Interests.

      


      (d)           If
a Dissenting Limited Partner shall fail to make a payment demand within the
period provided in Section 12.3(c) or, in respect of a plan of merger, plan of
exchange or plan of conversion approved by written consent of the Limited
Partners, shall fail to provide notice of dissent within the period set forth in
Section 12.3(a), such Dissenting Limited Partner and all persons claiming under
him shall be conclusively presumed to have approved and ratified the merger,
conversion or exchange and shall be bound thereby, the right of such Dissenting
Limited Partner to be paid the fair value of his Limited Partnership Interest
shall cease, and his status as a Limited Partner shall be restored without
prejudice to any proceedings which may have been taken during the interim, and
such Dissenting Limited Partner shall be entitled to receive any distributions
made to Limited Partners in the interim.


      
        
           


        

        
          41

          
            

          

        

        
           


        

      


      ARTICLE
XIII


      ARTICLE
XXVIIIGENERAL PROVISIONS

      


      13.1         Notices.  All
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or upon deposit
in the United States mail, registered, postage prepaid return receipt requested,
to the Partners at the addresses set forth in Exhibit A attached
hereto; provided, however, that any Partner may specify a different address by
notifying the General Partner in writing of such different
address.  Notices to the Partnership shall be delivered at or mailed
to its specified office.

      


      13.2         Survival
of Rights.  Subject
to the provisions limiting transfers, this Agreement shall be binding upon and
inure to the benefit of the Partners and the Partnership and their respective
legal representatives, successors, transferees and assigns.

      


      13.3         Additional
Documents.  Each
Partner agrees to perform all further acts and execute, swear to, acknowledge
and deliver all further documents that may be reasonable, necessary, appropriate
or desirable to carry out the provisions of this Agreement or the
Act.

      


      13.4         Severability.  If
any provision of this Agreement shall be declared illegal, invalid, or
unenforceable in any jurisdiction, then such provision shall be deemed to be
severable from this Agreement (to the extent permitted by law) and in any event
such illegality, invalidity or unenforceability shall not affect the
remainder.

      


      13.5         Entire
Agreement

      .  This
Agreement and exhibits attached hereto constitute the entire Agreement of the
Partners and supersede all prior written agreements and prior and
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof, except as otherwise set forth herein.

      


      28.6         Pronouns
and Plurals.  When
the context in which words are used in the Agreement indicates that such is the
intent, words in the singular number shall include the plural and the masculine
gender shall include the neuter or female gender as the context may
require.

      


      13.7         Headings.  The
Article and Section headings in this Agreement are for convenience only and
shall not be used in construing the scope of this Agreement or any particular
Article or Section.

      


      13.8         Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original copy and all of which together shall constitute one and the
same instrument binding on all parties hereto, notwithstanding that all parties
shall not have signed the same counterpart.

      


      13.9         Governing  Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware; provided, however, that any cause of action for violation of
federal or state securities law shall not be governed by this Section
13.9.

      


      13.10       Arbitration.  Notwithstanding
anything to the contrary contained in this Agreement, all claims, disputes and
controversies between the parties hereto (including, without limitation, any
claims, disputes and controversies between the Partnership and any one or more
of the Partners and between or among any Partners) arising out of or in
connection with this Agreement or the Partnership created hereby, or any act or
failure to act by the General Partner or any other Partner hereunder, shall be
resolved by binding arbitration in Phoenix, Arizona by the American Arbitration
Association (the “AAA”),
in accordance with this Section 13.10.  Any arbitration called for by
this Section 13.10 shall be conducted in accordance with the following
procedures:


      
        
           


        

        
          42

          
            

          

        

        
           


        

      


      (a)           The
Partnership or any Partner (the “Requesting Party”) may demand
arbitration pursuant to this Section 13.10 at any time by giving written notice
of such demand (the “Demand
Notice”) to all other Partners and (if the Requesting Party is not the
Partnership) to the Partnership which Demand Notice shall describe in reasonable
detail the nature of the claim, dispute or controversy.

      


      (b)           Within
15 days after the giving of a Demand Notice or such additional time as required
by the AAA, the AAA shall select and designate in writing three reputable,
disinterested individuals willing to act as an arbitrator of the claim, dispute
or controversy in question.

      


      (c)           The
presentations of the parties hereto in the arbitration proceeding shall be
commenced and completed within sixty (60) days after the selection of the
arbitration panel pursuant to subsection B above, and the arbitration panel
shall render its decision (and specify in reasonable detail its reasons
therefor) in writing within thirty (30) days after the completion of such
presentations.  Any decision concurred in by any two (2) of the
arbitrators shall constitute the decision of the arbitration panel, and
unanimity shall not be required.

      


      (d)           The
arbitration panel shall include in its decision a direction that all of the
attorneys’ fees and costs of any party or parties and the costs of such
arbitration be paid by the losing party or parties in the
arbitration.  On the application of a party before or after the
initial decision of the arbitration panel, and proof of its attorneys’ fees and
costs, the arbitration panel shall order the other party to make any payments
directed pursuant to the preceding sentence.

      


      Any
decision rendered by the arbitration panel in accordance herewith shall be final
and binding on the parties hereto, and judgment thereon may be entered by any
state or federal court of competent jurisdiction.  Arbitration shall
be the exclusive method available for resolution of claims, disputes and
controversies arising between and among the parties relating to this Agreement
and the conduct of the parties hereto in relation to Partnership matters, and
the Partnership and its Partners stipulate that the provisions of this Agreement
shall be a complete defense to any suit, action or proceeding in any court or
before any administrative or arbitration tribunal with respect to any such
claim, controversy or dispute.  The provisions of this Section 13.10
shall survive the dissolution of the Partnership.

      


      Nothing
contained herein shall be deemed to give the arbitrators any authority, power or
right to alter, change, amend, modify, add to, or subtract from any of the
provisions of this Agreement.

      


      13.11       Vote of
Affiliated Limited Partners.  Notwithstanding
any provision to the contrary set forth in this Agreement, in each instance in
which the consent, approval or vote of Limited Partners is required hereunder,
any Partnership Interest held as a Limited Partner by any Affiliate of the
Sponsor shall not be included for purposes of calculating whether the requisite
approval of Partners is obtained unless, as of the date of determination, there
are no Limited Partners entitled to vote or consent who are not Affiliates of
the Sponsor.

      


      13.12       Acknowledgement
as to Exculpation and Indemnification.    THE
PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS EXCULPATION
AND INDEMNIFICATION IN RESPECT OF THE ACTIONS OR OMISSIONS OF THE GENERAL
PARTNER AND DIRECTORS, OFFICERS AND AFFILIATES OF THE GENERAL PARTNER BY THE
PARTNERSHIP EVEN IF SUCH ACTIONS OR OMISSIONS CONSTITUTE NEGLIGENCE OF SUCH
PERSONS.

      


      [SIGNATURES
COMMENCE ON FOLLOWING PAGE]


      
        
           


        

        
          43

          
            

          

        

        
           


        

      


      IN WITNESS WHEREOF, the
parties hereto have hereunder affixed their signatures to this Agreement of
Limited Partnership effective as of the date first above written.

      


      


      
        	 
      	
                GENERAL PARTNER:

              
	 
      	 
      	 
      
	 
      	
                UNITED
      DEVELOPMENT FUNDING IV

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By: 
      

              	
                /s/ Hollis M. Greenlaw

              
	 
      	
                Name: 
      

              	
                Hollis M. Greenlaw

              
	 
      	
                Title: 
      

              	
                Chief Executive
  Officer

              


      

      


      


      [Signatures
Continue on the Following Page]

      


      


      Signature
Page to Limited Partnership Agreement of

      United
Development Funding IV Operating Partnership, L.P.


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

      


      
        	 
      	
                ORIGINAL LIMITED
PARTNER:

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                UMTH
      LAND DEVELOPMENT, L.P.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By: 
      

              	
                /s/ Hollis M. Greenlaw

              
	 
      	
                Name: 
      

              	
                Hollis M. Greenlaw

              
	 
      	
                Title: 
      

              	
                Chief Executive
  Officer

              


      

      


      


      Signature
Page to Limited Partnership Agreement of

      United
Development Funding IV Operating Partnership, L.P.


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      INDEX
OF EXHIBITS

      


      


      EXHIBIT A
- Partners, Capital Contributions and Partnership Units

      


      EXHIBIT B
- Notice of Exercise of Exchange Right

      


      EXHIBIT C
- Call Notice


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      EXHIBIT
A

      


      


      PARTNERS,
CAPITAL CONTRIBUTIONS AND PARTNERSHIP UNITS

      


      As of
July 9, 2008

      


      


      
        	
                Partners

              	 	
                Cash Contribution

              	 	 	
                Agreed Value of Property
      Contribution

              	 	
                Partnership Units

              
	 
      	 	 	 	 	 	 	 
      
	
                General
      Partner:

              	 	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 
      
	
                United
      Development Funding IV1301 Municipal Way, Suite 100Grapevine, Texas
      76051

              	 	$	900.00	 	 	 	N/A	 	
                9,000
      Units

              
	 
      	 	 	 	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 	 	 
      
	
                Original Limited
      Partner:

              	 	 	 	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 	 	 
      
	
                UMTH
      Land Development, L.P.1301 Municipal Way, Suite 100 Grapevine, Texas
      76051

              	 	$	0.90	 	 	 	N/A	 	
                9
      Units

              


      


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      EXHIBIT
B

      


      


      NOTICE
OF EXERCISE OF EXCHANGE RIGHT

      


      In
accordance with the Agreement of Limited Partnership of United Development
Funding IV Operating Partnership, L.P., as amended (the “Agreement”), the undersigned
hereby irrevocably (i) presents for exchange ___________ Partnership Units in
United Development Funding IV Operating Partnership, L.P. in accordance with the
terms of the Agreement and the Exchange Right referred to therein; (ii)
surrenders such Partnership Units and all right, title and interest therein; and
(iii) directs that the Cash Amount or REIT Shares Amount (as defined in the
Agreement) as determined by the General Partner deliverable upon exercise of the
Exchange Right be delivered to the address specified below, and if REIT Shares
(as defined in the Agreement) are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the address(es) specified
below.

      


      


      


      
        	
                Dated:___________________

              	 
      	
                ____________________________________________

              
	 
      	 
      	
                (Signature
      of Limited Partner)

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                

                  ____________________________________________

                

              
	 
      	 
      	
                (Printed
      Name of Limited Partner)

              
	 
      	 
      	 
      
	 
      	 
      	
                Mailing
      Address and Phone No.:

              
	 
      	 
      	 
      
	 
      	 
      	
                

                  ____________________________________________

                

              
	 
      	 
      	
                

                  ____________________________________________

                

              
	 
      	 
      	
                

                  ____________________________________________

                

              
	 
      	 
      	
                

                  ____________________________________________

                

              
	 
      	 
      	
                (_____)
      _______-______________________________

              


      

      


      


      Signature
Guaranteed by: ____________________________________

      


      If REIT
Shares are to be issued, issue to:

      


      Name:
____________________________

      


      Mailing
Address and Phone No.:

      


      
        	 
      	
                ____________________________

              
	 
      	
                ____________________________

              
	 
      	
                ____________________________

              
	 
      	
                ____________________________

              
	 
      	
                (_____)
      _______-______________

              


      

      


      Social
security or other tax identification number:
___________________________


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      EXHIBIT
C

      


      


      CALL
NOTICE

      


      In
accordance with the Agreement of Limited Partnership of United Development
Funding IV Operating Partnership, L.P., as amended (the “Agreement”), the undersigned
hereby irrevocably exercises its Call Right (as defined in the Agreement) with
regard to all of the Partnership Units owned by _____________________ in United
Development Funding IV Operating Partnership, L.P.  The undersigned
shall pay the [Cash Amount/REIT Shares Amount] to _____________________ at the
notice address of provided in the Agreement upon receipt of (i) the duly
executed Partnership Unit Certificate of ___________________ transferring all
right, title and interest in Partnership Units to the undersigned, (ii) if REIT
Shares are to be delivered, instructions as to the name, address and taxpayer
identification number of the person to whom such REIT Shares will be registered
or placed, and (iii) the representation, warranty and certification of that
_____________________ (a) has marketable and unencumbered title to such
Partnership Units, free and clear of the rights of or interests of any other
person or entity; (b) has the full right, power and authority to transfer and
surrender such Partnership Units as provided herein; and (c) has obtained the
consent or approval of all persons or entities, if any, having the right to
consent to or approve of such transfer and surrender.

      


      


      
        	 
      	
                UNITED
      DEVELOPMENT FUNDING IV

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	
                Name:

              	 
      
	 
      	
                Title: